All of the funds that the Trustnet editorial team backed at the start of 2022 made a loss during the opening half of the year, with most posting double-digit falls as the market tanked on myriad worries. 
The past six months have been incredibly difficult ones for investors, with high inflation, interest rate hikes, the war in Ukraine, Covid lockdowns in China and worries about a recession sparking heavy losses in both equity and bond markets.
Few funds have been able to shield themselves from these brutal conditions. In the interests of transparency, we took a look at the Trustnet editorial team’s 2022 fund picks to see how they are getting on.
Performance of TN fund picks vs UK and global equities in H1 2022
Source: FE Analytics
As the chart above makes clear, if the six funds the team picked out for 2022 were put into a portfolio, it would have been a disaster in the first half of the year.
An equally weighted portfolio of the Trustnet fund picks has lost 18.9% over the period under review, representing some hefty underperformance against the MSCI AC World index (down 11%) and the FSTE All Share (down 4.6%).
Of course, the funds were not chosen with a view to being held together in a portfolio, rather as picks for the individuals (something those of us who are doing relatively well are quite happy about). Likewise, as we made clear at the start of the year, these are in no way recommendations for others to act on.
As noted above, while the Trustnet editorial team’s 2022 picks have performed poorly in aggregate, some have held up relatively well over the turbulent conditions that investors have faced in recent months.
Performance of TN fund picks in H1 2022
Source: FE Analytics
Topping the league table halfway through the year is the pick of Trustnet editor Jonathan Jones: Schroder Global Recovery, which has lost 2.1%.
The fund has held up thanks to the rotation away from the growth style of investing, which is sensitive to increases in interest rates, and towards value stocks, which had spent a long time in the doghouse.
When choosing Schroder Global Recovery, Jones worried he could “look stupid” if 2022 ended up being yet another year when value funds underperformed, but it doesn’t look like this will be case. The fund is top quartile in the IA Global sector for the six months in question.
In second place is FE fundinfo head of editorial Gary Jackson, who decided to back one of his favourite funds this year: Trojan Ethical, which was down 4.5% in the first half but sat in the first quartile of the IA Flexible Investment sector.
“The pessimist in me can’t see how the bull market can be sustained for yet another year. Therefore, I’m going with a more defensive fund over something more punchy for 2022,” he said at the time.
Like all the funds run by Troy Asset Management, it prioritises capital protection above all else. Additionally, Troy has been warning for many years about inflation surprising on the upside and policy mistakes from central banks, and these are now playing out.
The remaining four funds that the team chose are all sitting on double-digit losses, largely down to the fact that they focus on growth stocks and have been hit hard by interest rate hikes.
Trustnet reporter Tom Aylott went for L&G Future World ESG Developed Index as he expected the interest in responsible investing to prove beneficial to its holdings.
However, EGS funds tend to have a high weighting to growth stocks – and tech in particular – and have found themselves in the middle of 2022’s sell-off. Aylott’s pick was down 14.8% in the first half, putting it in the third quartile of the IA Global sector.
In fourth place is former Trustnet senior reporter Abraham Darwyne, after Comgest Growth World lost 16%. He picked this fund because it is “laser-focused on finding companies that can consistently grow their earnings, which I think will be more important in 2022 than it has been over the past two years”.
However, the impact of rising rates and risk-off sentiment was enough to push this previous top performer into the IA Global sector’s third quartile.
Former Trustnet senior reporter Eve Maddock-Jones went for the GS Global Millennials Equity Portfolio fund because its top holdings include Amazon, Meta and Alphabet, which led the market for much of the previous decade.
“While the price of these companies can be debated, they are all undeniably strong brands that have pricing power, which should allow them to navigate a changing market environment of rising inflation and interest rates,” she said at the time.
However, the changing market environment made investors less willing to pay up for the future earnings of such companies and the fund dropped into the bottom quartile of the IA Global sector in 2022’s first half, after losing 28.4%.
Finally, Trustnet Magazine editor Anthony Luzio put in the worst showing after the JPMorgan UK Smaller Companies investment trust made a fourth-quartile loss of 35%.
Luzio expected the UK to continue to rebound in 2022 thanks to low valuations and the continuing recovery from the Covid-19 pandemic. “Whatever happens, I don’t expect this to be the best-performing trust in its sector next year – it doesn’t take a strong view on either growth or value. Yet in a market that should continue to rebound, it looks well placed to deliver double-digit returns,” he said.