Perennially, financial advisors and their clients debate over whether active or passive investment strategies are best.

At the end of a study of more than 30,000 mutual funds over three decades, FundQuest said the smart investor will take advantage of both approaches.

According to the study, which was released last week, just five mutual fund categories generated positive real alpha in both bull and bear markets. Funds that invest in emerging markets bonds, industrials, consumer staples, world allocation and foreign large growth all generated positive alpha regardless of whether the market was up or down.  

Last March, FundQuest studied more than 30,000 mutual funds over a 30-year period from January 1980 to February 2010, looking at every fund’s behavior pattern and performance over five full market cycles. Of the 73 categories in the study, the investment research company recommended a neutral investment approach for 28 categories, an active bias for 23 categories, and a passive approach for 22 groups.

“They both have their strengths and weaknesses. It is not all or none,” said Jane Li, manager of investment and research at Boston-based FundQuest.

Much comes down to the category that an investor is targeting and, in some cases, how much competition the fund manager is facing in finding the best picks. In the consumer staples category, for instance, active managers held the advantage, but in consumer discretionary, which is more cyclical, it was harder for managers to predict how well certain funds would perform.

Active managers could successfully exploit opportunities in the small- and mid-cap U.S. equity market, because companies in those categories do not get broad market coverage. Therefore, if a manager researches stocks where few others are looking, they are likely to find more funds that are outperforming than their peers, Li said. That is part of the reason emerging markets categories do so well.

“If you are just sitting in a Boston office, you’ll have no clue as to what is happening in Brazil,” Li said.

FundQuest found that the top 10 investment categories that generated the highest alpha over full market cycles were heavily populated with investments from afar. That group included emerging markets bonds, small growth, industrials, equity previous metals, diversified Pacific/Asia, foreign large growth and value stocks, foreign small and mid-cap value stocks and the world allocation category.