Funds investing in biotech and US smaller companies outpaced the rest of the market in June, FE fundinfo data shows, while gold portfolios and Seraphim Space Investment Trust sank to the bottom of the performance tables.
Last month was a busy one for markets, with the US and Iran signing a peace agreement (which is largely holding), Keir Starmer resigning as the UK's prime minister and Elon Musk's SpaceX pulling off its massive float.
Against that backdrop, June was a volatile month. Tech stocks sold off aggressively as investors worried about the high costs and uncertain returns of AI. This meant the best performing parts of the global equity market were healthcare, financials and industrials.
Best performing fund sectors in June 2026
Source: FE Analytics. Average return in sterling between 1 Jun and 30 Jun 2026
Accordingly, the highest-returning Investment Association sector was IA Healthcare and Biotechnology, where the average fund made an 8.4% total return in June.
Average returns follow a similar pattern in the Association of Investment Companies sectors, with the average IT Healthcare & Biotechnology trust up 9.7% last month. IT Property - UK Logistics is next with an 8.5% average return, followed by IT North American Smaller Companies (7.8%), IT India/Indian Subcontinent (7.3%) and IT Financials & Financial Innovation (6.5%).
Healthcare is one of the defensive areas of the market that investors rotated to over the month when tech stocks sold off. Healthcare companies tend to have high margins and recurring revenues, which investors like in times of uncertainty, while many are trading at attractive valuations after a period of underperformance.
Andy Acker and Dan Lyons, portfolio managers of Janus Henderson's healthcare and biotech strategies, said in their 2026 outlook that positives for the sector include an easing of some regulatory risks and better clarity on drug pricing reform.
"The Food and Drug Administration (FDA) has also proven its support for a strong US biopharma industry, having largely met review deadlines in 2025 and introduced new programmes for accelerating drug approvals," they explained.
"On top of that, medical advances have continued, benefitting from innovative new drug modalities and technologies. It's a setup that we believe could lead to strong risk/reward opportunities for certain areas of healthcare in 2026."
North American smaller companies funds and trusts also did well in June. Ben Yearsley, director at Fairview Investing, pointed out that these strategies often have a big biotech weight, which will have aided returns last month. By their nature, they also do not invest in the mega-cap tech names, so avoided their recent volatility.
Yearsley also pointed to the appearance of IA India/Indian Subcontinent and IT India/Indian Subcontinent sectors in the top four of both universes, following their underperformance for much of the year. "India, of course, is one of the big beneficiaries of the sharply falling oil price, which will ease pressure on both the central bank and government," he explained.
Source: FE Analytics. Total return in sterling between 1 Jun and 30 Jun 2026. Trusts excluding unclassified, hedge fund and VCT sectors.
Biotechnology funds and trusts are well represented in the list of the month's best performers, with The Biotech Growth Trust gaining 20.6% and Pictet Biotech, Polar Capital Biotechnology, WisdomTree BioRevolution UCITS ETF, Candriam Equities L Biotechnology, NYSE Arca Biotechnology UCITS ETF, iShares Nasdaq US Biotechnology UCITS ETF, RTW Biotech Opportunities and International Biotechnology Trust all posting double-digit returns.
Dealmaking has been a major driver of improving sentiment towards biotech, with M&A activity in the first half of 2026 already reaching $106bn, putting the sector on track for its strongest year since 2019. Large pharmaceutical companies have been aggressively acquiring smaller biotechs to replenish their pipelines ahead of looming patent cliffs.
The regulatory environment has also played its part, with the FDA signalling a more flexible approach to approving treatments for serious diseases in June. This has combined with a wave of positive clinical data in oncology, rare diseases and obesity, where companies such as Eli Lilly and Novo Nordisk continue to drive growth.
Geoffrey Hsu and Josh Golomb, portfolio managers at The Biotech Growth Trust, also pointed to the resignation of Marty Makary as FDA commissioner after 'a controversial tenure', as well as the departures of Katherine Szarama as head of the Center for Biologics Evaluation and Research and Tracy Beth Høeg as head of the Center for Drug Evaluation and Research, as notable for the sector.
"New acting directors have been appointed to each of the vacant senior leadership roles while the Trump administration considers the potential permanent replacements. Given the inconsistent way in which the FDA seemed to act on drug applications during Makary's term, we believe some stability and consistency at the agency will be welcomed by both investors and industry participants," they said.
"Our hope is that president Trump will appoint someone relatively noncontroversial to the FDA commissioner post. In the meantime, it seems drug reviews and approvals are continuing on schedule, and we are hopeful that the departure of Makary will lead to an even more constructive review environment."
Source: FE Analytics. Total return in sterling between 1 Jun and 30 Jun 2026. Trusts excluding unclassified, hedge fund and VCT sectors.
When it comes to June's worst performers, gold funds cluster at the bottom of the Investment Association universe, tracking the recent decline in the price of the yellow metal.
Yearsley said: "What goes up, eventually comes back down. After the stratospheric rise of gold over the last few years, inevitably it needed a pause for breath and a fall of $1,500 or so in 2026 has probably spooked some investors, especially those who like the momentum trade.
"Interestingly though, gold and commodity companies are in decent shape with cash pouring into the tills. With the prospect of rising rates on the horizon, gold might be in a funk for a while."
In the investment trust universe, Seraphim Space Investment Trust made the worst return with a fall of close to 25%.
The trust has reported record portfolio valuations and NAV growth, through holdings such as ICEYE, and was promoted to the FTSE 250 last month; analysts suggest the short-term share price volatility is due to investors digesting the impact of recent capital raises and broader financial market downturns.