When you're looking for the best ASX shares to add to your portfolio, sometimes it's helpful to let others do the heavy lifting.

This is where investment funds come into play, and based on one fund manager's results last year, the results can speak for themselves.

Investment firm Pengana's high-conviction equities strategy delivered an eye-popping 109% return in 2024. As reported by The Australian Financial Review, this puts it at the top spot among Australian investment funds for the year.

The fund credited much of this success to two standout performers: IperionX Ltd (ASX: IPX) and Clarity Pharmaceuticals Ltd (ASX: CU6).

These small-cap stocks drove the fund's gains last year, so they are worth a closer look for investors hunting for the best ASX shares in 2025. Let's see.

Pengana's best ASX shares

Pengana's high-conviction strategy focuses on small-cap stocks. As the AFR reported, portfolio manager James McDonald explained that smaller listed companies often offered greater opportunities than their large-cap counterparts.

The large-cap market is really tough, and we've just seen so many funds underperform the benchmark. I'm so glad that's not an area that we're fighting in.

There's just enormous opportunities in small companies, if you do your homework, to find great bargains.

Meanwhile, Wilson Asset Management says that small caps can outperform due to "reversion back to historical average multiples".

"Another way small caps can outperform is through earnings growth", it adds.

For Pengana, titanium producer IperionX was its largest holding in 2024 and a key driver of its outperformance.

According to the fund's most recent shareholder letter, IperionX was its best ASX share in December, when it surged 25% after fund manager Regal Funds increased its stake.

A glance at Pengana's September letter talked of the tailwinds from IperionX's contract win with vehicle giant Ford.

The initial contract size is modest at USD11 million but has the potential to increase in time as Ford adds more models and parts.

We view this very positively, validating the company's ability to supply commercial quantities of high value added components that sell at much higher prices than powder. The company has previously announced other development customers such as Lockheed Martin and GKN which we hope will also be converted to commercial contracts in the future.

Clarity Pharma adds to gains

Clarity Pharmaceuticals is a biotech company currently investigating a range of potential cancer therapies.

It delivered exceptional gains for Pengana in 2024, making it one of the best ASX shares for the period. They had reportedly increased by as much as 300% for the fundie at one point last year.

Clarity shares exploded in May after the company reported positive results from another clinical study investigating its treatment in prostate cancer. As my colleague James reported, shares were up 10% on the day alone.

Pengana also noted the results from Clarity's SECURE prostate cancer study in its September fund letter as well.

It expects another 14 patients to be dosed as part of the study throughout early 2025.

But Clarity wasn't Pengana's best ASX share for the latter half of the year, nor any shareholder's for that matter.

After peaking at $8.79 apiece in September, it closed the year at $4.17 apiece. This is a 47% decline from the mountain's peak.

The stock is still up more than 68% in the past year, even after this rapid decline.

Foolish takeout

These two stocks were some of the best ASX shares for Pengana's high-conviction equities fund last year.

Whether or not they will provide the same level of opportunity this year, only time will tell.

Both stocks have held substantial gains over the past 12 months, despite recent selling activity.