The blue chip index is down 7.09 per cent since the start of December, with a 9 per cent fall being seen over the past six days alone. Energy shares have been pulling the market lower, as investors react to Brent crude oil falling below $60 a barrel.
Other global indices are also down since the start of the month. The Euro Stoxx has shed 6.64 per cent, the MSCI Emerging Markets index is down 5.53 per cent, the S&P 500 has dropped 2.38 per cent and the Nikkei 225 has lost 2.19 per cent.
Performance of indices in December so far
Source: FE Analytics
The FTSE 100 has only fallen four times during December in 28 years but the recent declines have reduced the likelihood of a ‘Santa rally’. However, the last fortnight of the year are statistically the strongest two-week period of the whole year, so there’s still a very slim chance the index could rebound before the end of 2014.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “The pace of the fall has been breath-taking, with oil-related stocks bearing the worst of the pain. We are now closing in on a technical correction after just six abysmal trading sessions.”
“To give some perspective, we already witnessed a 10 per cent fall in the UK market in September and October of this year, but this took place over six weeks, not six days.”
For investors who were hoping to see a lift in their portfolios in the final month of the year, FE Trustnet looks the funds and sectors that are hurting the most in the ongoing correction. However, it must be noted that two weeks is too short a period on which to judge a long-term manager and past performance is no guide to future returns.
FE Analytics shows only three sectors have made money, on average, between the 1 and 15 of December and all of them invest in bonds – IMA UK Index-Linked Gilts, up 2.05 per cent; IMA UK Gilts, up 1.05 per cent; and IMA Sterling Corporate Bond, up 0.33 per cent.
Only 392 funds out of the IMA universe of almost 3,400 are up over December so far, led by Scottish Widows HIFML UK Property, Standard Life Investments Corporate Debt and Baillie Gifford Active Index Linked Gilt.
The worst performing sector, on the other hand, is IMA Global Emerging Markets where the average fund has lost 5.19 per cent since the start of the month.
IMA Global Emerging Markets Bond shows an average loss of 4.60 per cent, IMA Global Equity Income 3.53 per cent, IMA UK All Companies 3.51 per cent and IMA UK Equity Income 3.49 per cent.
According to FE Analytics, 229 funds have dropped more than 5 per cent over the past two weeks while 40 have lost more than 10 per cent.
Predictably, the list of the funds that have made the biggest December losses is dominated by those focusing on Russia, where the economy is dependent on oil exports, and energy stocks. Funds with exposure to Brazil also feature, thanks to its reliance on oil.
The HSBC GIF Russia Equity fund has made the biggest loss after tumbling 23.38 per cent. Some 38.69 per cent of the portfolio is in energy stocks with Lukoil and Gazprom being the second and third largest holdings.
Schroder ISF Global Small Cap Energy has made the second largest loss in the sell-off with a 21.15 per cent fall. The fund’s largest individual bets are on Antares Energy, Faroe Petroleum and Eland Oil & Gas.
Source: FE Analytics
Focusing on the two main UK sectors - IMA UK All Companies and IMA UK Equity Income – shows that the vast majority of funds have lost money in the sell-off. The average fund in both sectors, however, has fallen by less than the FTSE 100 and the FTSE All Share.
As a result of this, trackers top the underperformance tables. Scottish Widows UK Tracker is the biggest loser with a 6.87 per cent fall, followed by Virgin UK Index Tracking and Vanguard FTSE UK Equity Income Index, both of which have lost more than 6.80 per cent.
Standard Life Investments UK Equity General is the first active fund on the underperformers list, sitting in fourth place thanks to its 6.79 per cent fall. The fund’s top 10 holdings including energy stalwarts such as BP and Royal Dutch Shell.
Source: FE Analytics
But some 46 funds have fallen less than 2 per cent during the December sell-off. Unicorn UK Income, for example, is down just 0.38 per cent while other well-known funds protecting investor capital include AXA Framlington UK Select Opportunities, CF Miton UK Multi Cap Income and Schroder UK Mid 250.
What’s more, five funds from these two sectors have been able to post some slight gains in December.
Elite Webb Capital Smaller Companies Income & Growth is up 1.52 per cent, Unicorn Outstanding British Companies 1.11 per cent; Neptune UK Mid Cap 0.48 per cent; CF Miton UK Value Opportunities 0.16 per cent; and Aberdeen UK Mid Cap Equity 0.14 per cent.
