Gold equity strategies soared to the top of performance table in June, while two of veteran manager Neil Woodford’s income funds sunk to the bottom, according to data from FE Analytics.
After a challenging May, performance in June picked up somewhat as the expectations of interest rate cuts by the Federal Reserve buoyed markets and the US-China trade war talk abated.
“After such a torrid fourth quarter of 2018 for global markets, many would have looked ahead to 2019 with dread,” said Ben Yearsley, director of Shore Financial Planning.
“As usual, the Fed rode to the rescue in January with an effective halt to rate rises and hints of cuts. Those hints have become stronger even if there has been no action thus far.”
The best overall sector performance was recorded by the IA China/Greater China peer group where the average fund rose by 6.90 per cent during June.
It marks a significant turnaround in performance for Chinese equity strategies, with the peer group registering the biggest loss in May as the average fund lost 7.75 per cent.
The sector’s best performer in June was the four FE Crown-rated Baillie Gifford China fund, overseen by Mike Gush, Sophie Earnshaw and Richard Sneller. The £123.5m growth-oriented fund made a total return of 8.78 per cent last month.
It was closely followed by the Legg Mason IF Martin Currie China fund, managed by James Chong, which was up by 8.72 per cent.
Other sectors benefited as the trade war rhetoric was dialled down, as the IA Asia Pacific Excluding Japan and IA Global Emerging Markets – two areas also at risk of deteriorating relations between the US and China – recorded gains of around 5.4 per cent.
North American strategies also did well with the average IA North American Smaller Companies fund up by 5.60 per cent, while the IA North America peer group was up by 4.85 per cent.
Source: FE Analytics
At the other end of the performance table were gilts strategies, most notably the IA UK Index Linked Gilts where the average fund lost 1.87 per cent and the IA UK Gilts, which recorded a 0.14 per cent rise.
Other than inflation-linked gilts, the only other loss-making sector in June was the IA UK Smaller Companies sector, which was down by 1.87 per cent.
The ongoing uncertainty surrounding Brexit while a new prime minister is chosen meant that UK equities remain out-of-favour with international investors.
Last month the FTSE Small Cap index was down by 2.27 per cent while the FTSE AIM All Share index made a loss of 4.09 per cent.
On an individual fund level, gold equity strategies were June’s best performers dominating the top of the table. While the Bloomberg Gold Sub index was up 5.2 per cent (in sterling terms), the Nasdaq Philadelphia Stock Exchange Gold/Silver index – a closely watched index of 30 of the largest precious metals miners – was up by 19.10 per cent.
The £872m LF Ruffer Gold emerged as the best performer last month, making a total return of 22.91 per cent.
It was joined at the top by HC Charteris Gold & Precious Metals (up 19.81 per cent), BlackRock Gold & General (18.84 per cent), Investec Global Gold (18.84 per cent), Quilter Investors Precious Metals Equity (18.10 per cent), Smith & Williams Global Gold & Resources (15.36 per cent), Merian Gold And Silver (15.34 per cent), MFM Junior Gold (13.87 per cent) and TC South River Gold and Precious Metals (11.88 per cent).
Source: FE Analytics
Outside of the gold strategies – and the BlackRock GF World Mining fund, which was up 12.32 per cent – another notable trend was the strong performance of European equity strategies.
Giles Worthington’s £24m Smith & Williamson European Equity was up by 10.84 per cent last month and was the best performing fund outside of the gold miners-focused strategies.
Other top-performing European equity funds last month included several emerging Europe strategies, including Pictet Emerging Europe (with a total return of 10.20 per cent), Aberdeen Eastern European Equity (9.67 per cent) and BlackRock GF Emerging Europe (9.04 per cent).
At the other end of the performance table, one name stood out among the others as two of veteran fund manager Neil Woodford’s open-ended strategies and another fund managed for Omnis Investments slipped to losses.
While it was unaffected by the gating last month of Woodford’s flagship UK equity income fund, the worst performer was the internationally focused LF Woodford Income Focus fund, which made a loss of 8.46 per cent.
Omnis Income & Growth – a fund managed by Woodford for Omnis Investments – saw a loss of 8 per cent, although the Omnis-parent and adviser network Openwork announced that they would be handing the mandate to Jupiter Asset Management’s Ben Whitmore who also manages the Jupiter Income Trust.
The LF Woodford Equity Income fund, which was gated over performance and liquidity concerns at the start of the month, was down by 5.80 per cent.
Source: FE Analytics
As mentioned above, UK smaller companies funds were also among the worst performers during June, with several making the bottom of the list.
The worst-performing UK small-cap fund was Peter Webb’s Elite Webb Capital Smaller Companies Income & Growth fund, which was down by 5.30 per cent.
Other funds at the bottom of the table included Baillie Gifford British Smaller Companies (down 3.44 per cent), Aberforth UK Small Companies (-3.18 per cent), Merian UK Smaller Companies Focus (-3.11 per cent), FP Octopus UK Micro Cap Growth (-2.97 per cent) and AXA Framlington UK Smaller Companies (-2.90 per cent).