April was a good month for UK equity funds as the threat of an imminent ‘no deal’ Brexit was lifted, but less so for investors in gold-related strategies following the rally in risk assets since the start of the year, according to data from FE Analytics.
Broadly, equities have risen as risk appetite has returned with many of the concerns dogging markets seemed largely resolved or postponed for now.
In addition, the extension of the Brexit deadline in the UK helped allay some investor concerns over what has become one of the most shunned markets around the world.
As such, it was a positive month for markets with the S&P 500 up by 3.97 per cent – in sterling terms – while the FTSE All Share rose by 2.68 per cent and the MSCI World was up by 3.5 per cent.
The best-performing fund sector of the month was IA Technology & Telecommunications, where the average fund made a total return of 6.64 per cent during April.
Source: FE Analytics
Several smaller companies-focused sectors also had a strong month, with the IA UK Smaller Companies, IA European Smaller Companies and IA North American Smaller Companies sectors all up by at least 5 per cent.
Developed markets strategies performed well generally with the average Europe ex UK, North America and UK All Companies fund reporting solid single-digit gains.
There were few loss-making sectors in April, but the two UK gilts sectors stood out as poor performers at a time where markets continue to favour risk assets.
With strong returns on offer in the equity market, gilts below-inflation yields are looking increasingly less attractive. As a result, the IA UK Index Linked Gilts and IA UK Gilts sectors were down by 1.9 per cent and 1.67 per cent respectively.
The only other sector to record a loss was IA Property Other – which is home to a range of strategies that do not qualify for the IA UK Direct Property peer group – which was down by 0.53 per cent.
Although IA Technology & Telecommunications was the best peer group, the strong returns made by active UK equity strategies was reflected in the list of top-performing funds.
Half of the top-20 best performing funds in April were UK equity strategies, led by Gavin Launder's £199.3m L&G Growth Trust. The fund made a 11.19 per cent total return in April and is now up by 24.1 per cent after the first four months of the year.
Source: FE Analytics
It was joined at the top by the five FE Crown-rated CFP SDL UK Buffettology fund which made a 11.15 per cent gain last month. The highly regarded fund is overseen by FE Alpha Manager Keith Ashworth-Lord and follows the ‘business perspective’ investment style of investment grandee Warren Buffett.
Standard Life Investments UK Opportunities, managed by Abby Glennie, also made a double-digit total return cent during April and was up by 10.54 per cent.
There were also some strong returns further down the market capitalisation scale, with several UK smaller companies strategies making the top-20 best performers list.
The MI Discretionary Unit Fund was the third best performer in April overall and the best IA UK Smaller Companies fund, with a total return of 10.89 per cent. It was joined in the list by peers Standard Life Investments UK Smaller Companies and Threadneedle UK Smaller Companies.
Elsewhere there were several specialist strategies could be found at the top of the table, chief among them the Fiera Capital Europe Magna MENA fund, with a return of 10.52 per cent. Two German equity strategies – Barings German Growth Trust and Allianz German Equity – also recorded strong gains in April.
Sector-specific strategies from the IA Technology & Telecommunications sector – where three of the funds hailed from – also made the list, led by AXA Framlington Global Technology and its 9.06 per cent gain last month.
There were also three global equity strategies – Guinness Global Money Managers, Standard Life Investments Global Smaller Companies and Natixis Harris Associates Global Equity – among the top-20 best performers.
Conversely, the worst-performing funds were dominated by specialist strategies, although there was one specific theme that stuck out: gold.
While the S&P GSCI Gold Spot index fell by just 0.82 per cent over the month, in sterling terms, gold mining stocks –as represented by the FTSE Gold Mines index – were down 7.38 per cent.
As such, there were eight strategies focused on the yellow metal to be found at the foot of the performance table.
Source: FE Analytics
The worst-performing strategy in April was MFM Junior Gold, a strategy focused on early-stage gold mining companies managed by Angelos Damaskos, which made a loss of 12.19 per cent.
Other gold strategies that stuck out include the LF Ruffer Gold, BlackRock Gold & General and Investec Global Gold funds.
Several absolute return strategies also appeared at the bottom of the performance table including VT Garraway Absolute Equity, Majedie Tortoise, VT Oxeye Hedged Income Option, TM Sanditon European Select and Merian Global Equity Absolute Return.
There were also several healthcare funds found at the bottom of the performance table with the Polar Capital Healthcare Blue Chip fund down by 4.11 per cent. It was joined by Fidelity Global Health Care, Pictet Biotech, and Polar Capital Healthcare Opportunities.