The best and worst performing funds from 2020 to date: technology, US and gold

Funds invested in the U.S., in technology and in gold reached the top of the best performance charts of 2020 after its tumultuous first six months.

While the massive liquidation of world markets in March was blind, the recovery was less so. Sectors deemed vulnerable to Covid and the evolving business landscape it forms have been overlooked as technology, biotechnology and healthcare have advanced.

Meanwhile, investors have also fled to safe haven assets like gold and government bonds.

Stock markets in some countries - such as the United States - held up better than others in the aftermath of the Covid crash, just as some sectors, such as technology, advanced while others suffered from the economic impact of the virus.

Stock markets in some countries – such as the United States – held up better than others in the aftermath of the Covid crash, just as certain sectors, such as technology, advanced while others suffered from the economic impact of the virus.

Asian countries that appeared to be either relatively unharmed or quickly emerged from the lockout benefited. Despite its untold number of cases and the unpredictable response from its government, the U.S. stock market has been the most spectacular of all collections – as evidenced by the best lists of funds below.

The fund managers have proven themselves, with active funds doing well in the American market in strong recovery. But less so in the UK, whose stock market has struggled compared to the US and Asia, and whose active funds have done less to protect investors from volatility.

Laura Suter, Personal Finance Analyst, AJ Bell, observes that over the six months the FTSE 100 index has dropped 17%, the FTSE All Share index 18% and the FTSE 250 small business index down just over 21%.

“In comparison, the rest of the world looks brighter, with the S&P 500 market down 2.9%, the Nikkei 225 by 5.8% and the SSE by 2.2%,” she added. “The MSCI World index of global companies recorded a much less dramatic drop of 0.2% over this period.”

The sectarian nature of the global recovery in stocks is exposed in the best and worst performing funds.

Top performing funds Performance Underperforming funds Performance
LF Ruffer Gold 56.0% ASI UK Recovery Equity -42.5%
Baillie Gifford American 54.1% LF equity income -42.4%
Morgan Stanley US Growth 53.1% HSBC GIF Brazil Equity -42.1%
Matthews China Small Business 52.3% Schroder ISF Global Energy -39.7%
LF Access’s long-term global growth 47.8% The VT Oxeye Covered Income Option 37.7%
American advantage Morgan Stanley 38.0% Guinness – Global Energy 36.7%
MFM Junior Gold 36.4% Alquity Latin America 35.6%
Baillie Gifford’s world discovery 35.9% Brown Advisory Latin America 35.5%
ES – Gold and precious metals 34.7% JPM – Brazilian Equity 35.5%
Baillie Gifford’s positive change 34.3% MFS Meridian – Latin America 34.7%
Source: AJ Bell / FE fundinfo. The performance is a total return from January 01, 2020 to June 30, 2020

AJ Bell’s data (above) differs slightly from that of Willis Owen (below) as the former shows the fund’s performance in its local currency while the latter translates returns into pounds sterling. This means that while AJ Bell’s figures more accurately represent the actual performance of the fund itself, Willis Owen’s figures more accurately reflect the returns that UK investors will have seen on their online platforms after the entry into force. foreign exchange rates..

Top performing funds Performance Underperforming funds Performance
Morgan Stanley US Growth 64.17% ASI UK Recovery Equity -42.48%
Matthews China Small Business 63.23% LF equity income -42.40%
LF Ruffer Gold 55.97% Schroder ISF Global Energy -39.74%
Baillie Gifford American 54.06% HSBC GIF Brazil Equity -38.53%
LF Access’s long-term global growth 47.79% The VT Oxeye Covered Income Option -37.65%
Baillie Gifford’s long-term global growth 47% TB Guinness Global Energy -36.70%
American advantage Morgan Stanley 41.56% Guinness Global Energy -36.41%
New leaders of the future in the United States 37.30% MFS Meridian Latin American Equity -34.69%
MFM Junior Gold 36.41% Aberforth UK Small Business -34.20%
Baillie Gifford’s world discovery 35.96% Invesco Latin America (United Kingdom) -33.69%
Source: Willis Owen / FE Analytics. The performance is the total return from December 31, 2019 to June 30, 2020 in pounds sterling

Adrian Lowcock, head of personal investments at Willis Owen, said the Morgan Stanley US Growth fund had led the way through a combination of technology and health care.

“Likewise, Matthews China Small Companies has benefited from exposure to the same sectors as well as the recovery seen in Chinese markets,” he added.

“To complete the top three, LF Ruffer Gold. Gold finished the first half of the year at over $ 1,800 as the stock rally slowed and investors worried about a second wave of viruses. ”

The dominance of targeted funds in the United States can be attributed to the three main factors. First, the huge monetary response from the US Federal Reserve and the feeling that the Trump administration will not allow a financial crisis in the run-up to the elections.

10 best performing sectors Performance 10 worst performing sectors Performance
Technology and telecommunications 20.07% UK Equity Income -20.19%
British Index Gilts 13.69% UK All companies -17.68%
China / Greater China 12.97% British small businesses -16.59%
UK Gilts 10.14% UK equities and bond income -14.26%
Global bonds 6.21% Other property -11.45%
Asia-Pacific, including Japan 5.36% Global equity income -6.25%
North America 3.05% Sterling High Yield -5.20%
Sterling Corporate Bond 2.73% Global emerging markets -5.14%
Global EM Bonds Hard Currency 2.41% Mixed investment 40-85% of shares -4.29%
Global EM Bonds Blended 2.03% Mixed equity investment 20-60% -4.06%
Source: FE Analytics, performance from December 31, 2019 to June 30, 2020 in pounds sterling on a total return basis

Second, the preponderance of major global technology stocks in the American indices. And third, the US market is generally considered a safe bet compared to all other stock markets.

Laura Suter also noted the bright spot for Stateside managed funds, “where active managers have managed to outperform the markets on average.”

“Usually the US market is dismissed as too efficient for active managers to outperform, but volatile markets have proven to be ripe ground for fund managers,” she added. “The average US fund returned 3.6% on average, compared to 1.4% for the S&P 500”.

The Chinese market performed well as the country was the first to enter and exit a lock that had successfully contained the virus.

“The economic recovery in China has been reassuring for investors and has helped drive markets up, helped by its exposure to technology,” said Lowcock.

“Government bonds had a solid six-month period as they once again proved their safe haven reputation when the stock markets collapsed. The performance of UK indexed gilts was boosted by two interest rate cuts, to 0.1%, and further quantitative easing as well as extensive employment support and fiscal stimulus programs. “

The UK stock market was already unloved due to the lingering uncertainty of the impact of Brexit. The government’s stumbling block to the crisis and the worst death rates of any major European country have only exacerbated these reserves among global investors.

Lowcock adds that with UK stocks known around the world for their stable earnings, dividend cuts have hit the domestic market hard – and in particular the UK equity earnings sector, already shocked last year by the Woodford fury.

Top performing funds Performance (%) Underperforming funds Performance (%)
LF Miton UK Multi Cap Income -7.63 MI Chelverton UK Equity Income -30.33
ES R&M UK Equity Income TR -9.14 UBS UK Equity Income -30.26
DMS Charteris Premium Income -10.88 UK Equity Income Brokers -29.51
AXA Framlington UK Equity Income -11.09 JOHCM UK Equity Income -29.19
FP Octopus UK Multi Cap Income -11.34 First monthly income TR -29.02
Troy Asset Management Ltd Trojan Income -11.62 Premier Optimum Income TR -28.62
BlackRock UK Income -12 Aberdeen LF ASI Income Focus -28.57
ASI UK Income Equity -12.59 TB Saracen UK Income -28.5
LF Gresham House UK Multi Cap Income -14.14 Premier Income TR -28.41
Santander TR Enhanced Income Portfolio -14.21 Unicorn UK Ethical Income -26.47
Source: AJ Bell / FE fundinfo. Performances are from Jan 01, 2020 to June 30, 2020

“The UK equity income sector dominated the underperforming countries in the first half, with companies rushing to cut dividends, some were necessary, some were cautious and others were taxed on companies,” said he declares.

“The dividend reduction rate in the UK is unprecedented. Many dividend-paying companies have lagged behind in the recovery because they have been in areas of the markets that should not benefit from short-term changes in people’s behavior – such as energy, finance and insurance. .

He further noted that the weakness of the pound sterling during the crisis also helped the UK market to underperform as a weak pound helps improve the performance of international stocks.

Laura Suter observes that the average equity income fund manager lost more than the FTSE All Share and the FTSE 100, an average decline of 18.9% since the start of the year.

“In addition, two-thirds of the funds in the sector generated below-market returns,” she adds. “The best performer was LF Miton UK Multi Cap Income, with a loss of 6.5%.”

Top performing funds Performance (%) Underperforming funds Performance (%)
Royal London Sustainable Leaders Trust -2.77 ASI UK Recovery Equity -42.48
VT Sorbus Vector -3.88 ASI UK Unconstrained Equity -33.36
BlackRock UK -4.08 GVQ UK Focus TR -32.18
Marlborough multicapacity growth -4.78 GVQ Opportunities TR -31.45
Aviva Inv UK Equity MoM -5.26 Ninety-one special situations in the UK -30.1
Baillie Gifford UK Equity Focus -5.95 UBS UK opportunities -29.29
Ninety One UK Sustainable Equity -6.19 JOHCM UK Dynamic -29.19
CFP SDL Free Spirit -6.84 Jupiter UK Growth TR -29.19
VT Castlebay UK Equity -7.17 VT Cape Wrath Focus -29.16
MI Charles Stanley Equity -7.18 Aviva Inv UK Listed Equity High Alpha -28.83
Source: AJ Bell / FE fundinfo. Performances are from Jan 01, 2020 to June 30, 2020

Suter noted that fund investors will be dismayed that active British funds have not proven their worth during this period.

“The average UK All Companies fund has posted the same return as the FTSE All Share since the start of the year, ie -16.6%. In total, almost half had a worse return than the index, ”she said.

“No UK All Companies fund managed to achieve a positive return, the best performances coming from the Royal London Sustainable Leaders Trust ethical fund, with a loss of 2.8%. It took advantage of its lack of exposure to oil and energy companies and its overweight in health and technology stocks.

“The worst performer was the value-driven ASI UK Recovery Equity, which has lost investors 42.5% since the start of the year.”

Top performing funds Performance (%) Underperforming funds Performance (%)
Argonaut FP Argonaut Absolute Return 20.51 Natixis H2O MultiReturns -23.95
Kames Global Equity Market Neutral 9.4 Liontrust GF European Strategic Equity -23.91
Wellington Global Total Return 8.47 BlackRock Emerging Markets Absolute Alpha -20.72
BlackRock European Absolute Alpha 7.72 VT iFunds Absolute Return Orange -19.35
Thesis TM Tellworth UK Select 7.55 Jupiter Absolute Return -13.01
GAM Star Emerging Markets Rates 7.29 VT Woodhill UK Equity Strategic -12.57
Merian UK Specialist Equity 7.08 Winton Absolute Return Futures -10.42
Eaton Vance Int global macro (Ire) 6.96 VT iFunds Absolute Return Green -9.79
BlackRock Systematic Global Long Short Equity 6.47 BNY Mellon Global Absolute Return -9.24
Allianz Fixed Income Macro 5.76 GAM Star global rates -8.78
Source: AJ Bell / FE fundinfo. Performances are from Jan 01, 2020 to June 30, 2020

In addition, Suter observed that many investors would have liked to switch to “Steady Eddy” funds in the volatility of the market, in the hope of mitigating their losses.

“But many absolute return funds have failed to meet their mandate to reduce the risk of downturn in bumpy markets. On average, the sector recorded a loss of 2% over the year and almost two-thirds of the funds recorded a loss during the period, “she said.

“The worst of a bad group was Natixis H2O MultiReturns with a loss of -24%, much more than the stock markets. Argonaut Absolute Return had the highest return, at 20.5%.

Although Suter notes that, ironically, such stellar gains in times of crisis may not be the performance you would expect from an absolute return fund that aims to deliver stable returns in all markets.

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