It has been an extremely challenging year for investors, with many funds struggling to make it into the black and others racking up large losses. There have also – inevitably – been a few decent performers mainly due to the sectors in which they operate.
According to analysis by AJ Bell, the top performing funds measured over the period from 1stJanuary to 7thDecember are dominated by those that invest in the US stock market, as well as the sector specialists that focus on high growth areas such as Healthcare, Biotech and Technology.
The best of the lot was Baillie Gifford American
The best of the lot was Baillie Gifford American, whose significant exposure to big Tech names such as Amazon, Netflix, Alphabet and Facebook, has helped it to achieve an increase of 26%. Many of these stocks have suffered sharp reversals in the second half of the year, although the healthy gains made in the first six months mean that several have still made strong returns over the period as a whole.
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Several other American funds have also comfortably outperformed their benchmark indices including T Rowe Price’s US Large Cap Growth Equity and US Blue Chip Equity, with returns of 17% and 16% respectively, as well as Artemis US Smaller Companies, which was up 15%. All three have a bias towards growth stocks that have outperformed this year, which would make them vulnerable if there was a shift back to value.
The top performing investment trusts are mostly niche products and include the healthcare specialist Syncona (LON:SYNC), up 32%; EJF Investments (LON:EJFI), which has generated a return of 22% by targeting regulatory and structural change in the financial services sector; the property focused LXI REIT (LON:LXI) with its gain of 20%; as well as several different versions of the Doric Nimrod Air aircraft leasing trust.
It has been an incredibly tough year, with AJ Bell calculating that only 22% of active funds have delivered a positive return and just 36% of investment trusts. Things have been especially difficult for the UK-focused managers because of Brexit with just three UK Equity Income funds and seven out of more than 200 UK All Companies funds making it into the black.
Neil Woodford has had a particularly bad year
Neil Woodford has had a particularly bad year, with his Quilter Investors UK Equity Income II fund being the second worst performer overall with a loss of 26% and his Woodford Equity Income fund making a loss of 13%.
One of the worst hit areas overseas was the Emerging Markets with the sector falling around 13% due to the slowdown in China and the US/China trade war. This has inevitably dragged down many of the funds and investment trusts operating in the sector. India has also been hit with the Jupiter India Select fund dropping 29%, Jupiter India losing 25% and the India Capital Growth (LON:IGC) investment trust declining 26%.
Other noteworthy losers included CATCo Reinsurance Opportunities (LON:CAT), which aims to generate returns from investments linked to catastrophe reinsurance risks, but that was hit by a number of large loss events and recorded a devastating 79% decline. Meanwhile, the commercial property trust Intu Properties (LON:INTU) fell 52% following a failed takeover bid, andretail-focused REITs such as the NewRiver REIT (LON:NRR) and Hammerson (LON:HMSO) recorded losses of 33% and 29% respectively.
Perhaps the most surprising aspect is that the bottom 10 performing funds contain three that invest in gold equities. Gold would normally flourish during this kind of market sell-off, although it could just be that the strong dollar has kept a lid on it. The three culprits are TC South River Gold and Precious Metals (with a loss of 29%), MFM Junior Gold (down 25%), and HC Charteris Gold & Precious Metals (down 24%).