Of course, one of the biggest market events was the EU referendum which took place on 23 June, with the result revealed early the following day.
UK markets initially reacted negatively to the vote with the FTSE 100 and FTSE 250 both sliding in the first few days after the vote.
However, stocks began to rally later in the year with the FTSE 100 recording the strongest gains as investors moved out of smaller, domestically-focused companies into large-cap, international equities.
The US presidential election and victory of populist Republican candidate Donald Trump later provided a further boost for equity markets cheered by the new president’s pro-growth campaign.
In this environment, fund performance began to change at the start of the second half of the year.
Indeed, at the end of June 2016, 2,705 funds in the Investment Association universe had recorded a positive return, compared with 708 generating a return of 0 per cent or a negative return.
By the end of the year, the number of fund funds recording a 0 per cent return or loss had fallen to 122, with 3,302 in positive territory.
Below, FE Trustnet explores some of the best- and worst-performing funds, sectors and FE Alpha Managers of the first half of 2016 and how they are performing one year later.
The best performer during the first half of 2016 was the four crown-rated MFM Junior Gold fund managed by Angelos Damaskos, which returned 165.64 per cent.
However, in the year to 26 June the fund has returned just 3.49 per cent. Indeed, since 24 June 2016, the fund has recorded a loss of -16.86 per cent.
Performance of fund vs sector & benchmark in 2017
Source: FE Analytics
The fund, which invests in early-stage gold mining companies, performed well initially although performance started to dip significantly towards the end of August and again in November.
It was joined by several other funds focused on gold and other precious metals-related equities.
HC Charteris Gold & Precious Metals fund, the top performing funds of 2016 with a gain of 133.95 per cent, was up by 155.32 per cent by the half-year mark.
However, like the MFM Junior Gold, the Charteris fund has experienced reversal of fortunes suffering a loss of 3.14 per cent to 27 June.
Commodities were boosted towards the end of last year as markets anticipated Donald Trump’s pro-growth and infrastructure investment policies. However, this has since fallen back as the new president has faced challenges in implementing his plans.
The Bloomberg Gold Sub index has risen by just 4.5 per cent over the same period, while the FTSE Gold Mines index is up by 3.88 per cent, although it has experienced heightened volatility ratio of 36.1 over one year.
The worst performer during the first half of 2016 was the £244.3m Neptune Japan Opportunities fund, overseen by Chris Taylor, with a loss of 21.04 per cent.
However, it has fared better during the first half of this year, generating a return of 9.3 per cent. It has also performed strongly over the past year, rising by 35.33 per cent, although it remains a fourth quartile performer with the average IA Japan fund up by 39.03 per cent.
Japanese strategies have performed strongly following a rally in markets, with the benchmark TOPIX index up by 34.19 per cent.
Performance of IA Japan sector vs TOPIX over 1yr
Source: FE Analytics
The top performing fund managed by an FE Alpha Manager during the first half of 2016 was the £88.6m, five crown-rated Investec Global Gold fund.
Co-managed by FE Alpha Manager George Cheveley and colleague Hanré Rossouw, the fund returned 115.28 per cent during the first six months of 2016. This year the fund is flat with a 0.27 per cent return.
The worst performing fund overseen by an FE Alpha Manager during H1 2016 was the £172m FP Argonaut Absolute Return fund, which lost 20.32 per cent.
The fund is managed by FE Alpha Manager Barry Norris and deputy manager Greg Bennett. It has fared better this year, cutting losses to just 0.53 per cent in the first part of 2017; however, the IA Targeted Absolute Return sector fund is down by 9.7 per cent over one year.
The best performing sector of the first half of 2016 was IA Japanese Smaller Companies, where the average fund returned 21.43 per cent. So far in 2017 the sector is up by 13.75 per cent.
The sector’s best performing fund during the first half of 2016 was Osamu Tokuno’s £53.3m Invesco Perpetual Japanese Smaller Companies fund, which rose by 50.92 per cent. This year it is up by 19.03 per cent.
The worst performing sector during the first half of 2016, as may be expected, was the IA UK Smaller Companies sector which saw a decline of 9.44 per cent.
In the final week, which saw the EU referendum result and subsequent sharp sell-off in UK small-caps, the worst performing sector was IA China/Greater China with a loss of 6.39 per cent.
Indeed, the best performing fund during the first six months of 2016 was the Jupiter UK Smaller Companies fund, which recorded a loss of 2.41 per cent. It has performed much better in 2017, recording a double-digit gain of 16.87 per cent.
The sector has fared better in 2017 so far, rising by 14.95 per cent and emerging as one of the top performing sectors.