Funds focused on Latin America were among the best performers in July with those focused on gold and Asia-focused strategies dominating the bottom of the performance table, according to data from FE Analytics.
After a challenging start to 2018 for many managers amid concerns over a potential trade war and the withdrawal of central bank stimulus, the summer months have provided some respite from the news-heavy first half.
The developed markets-focused MSCI World index rose by 3.79 per cent, buoyed by a particularly strong performance from US stocks as the S&P 500 gained 4.36 per cent during July.
Even the emerging markets, which have suffered disproportionately as a result of US president Donald Trump’s hard line on tariffs and a stronger US dollar, saw an uptick in performance as the MSCI Emerging Markets index rose by 2.86 per cent.
Closer to home, the FTSE All Share index rose by just 1.29 per cent over the month as uncertainty surrounding ongoing Brexit negotiations continued to rattle the market.
In the fixed income sector, the benchmark Bloomberg Barclays Global Aggregate index, meanwhile, rose by just 0.48 per cent over the month, in sterling terms.
Performance of indices in July
Source: FE Analytics
With many asset classes performing strongly last month, below FE Trustnet explores which funds and sectors from the Investment Association had a good July and identify those that struggled.
On a sector view, the best performer was the IA Europe Excluding UK sector, where the average fund delivered a total return of 3.68 per cent in July.
The standout performer from the sector was FE Alpha Manager Rob Burnett’s £405.1m Neptune European Opportunities fund, which was up by 6.85 per cent. It was closely followed by £234.5m, four FE Crown-rated Scottish Widows European Select Growth fund, which generated a 6.36 per cent total return.
The IA Europe Excluding UK sector was closely followed by IA Global Equity Income (with an average return of 3.44 per cent) and IA Europe Including UK (up by 3.17 per cent).
However, almost all sectors were in positive territory during July, albeit with low single-digit and flattish returns.
The worst performing sector – for the second month running – was IA China/Greater China, where the average fund lost 1.83 per cent having lost 4.02 per cent in June.
The worst performer in the sector was the $110.7m New Capital China Equity fund managed by Mansfield Mok, which generated a loss of 4.33 per cent.
The IA Japanese Smaller Companies peer group also posted a loss of 0.69 per cent, closely followed by the IA UK Gilts sector (down by 0.68 per cent).
On an individual fund basis, the best performer in July was the MFM Junior Oils Trust managed by Angelos Damaskos, which delivered a return of 18.05 per cent.
The £9.9m fund invests in small- and medium-sized companies from across the world specialising in oil exploration and production.
It has benefited from a rising oil price with the Bloomberg Brent Crude Sub and Bloomberg West Texas Intermediate Crude Oil Sub indices up by around 20 per cent during 2018.
So far this year, MFM Junior Oils Trust – which sits in the IA Specialist sector – has returned 15.02 per cent compared with a 10.06 per cent gain for the benchmark FTSE 350 Oil & Gas index.
Performance of fund vs index YTD
Source: FE Analytics
Also at the top of July’s performance table was GAM Star Discretionary FX – an aboslute reurn fund managed by Adrian Owens and investing in currencies or currency derivatives – which was up by 14.82 per cent.
There were also a number of Latin America-focused strategies at the top of the table, led by the five FE Crown-rated Neptune Latin America fund.
The £32.9m fund managed by Neptune’ co-head of emerging market equities Thomas Smith recorded a 14.47 per cent rise in July.
Other significant performers included the Scottish Widows Latin American, Aberdeen Latin American, BNY Brazil Equity, Templeton Latin America, BlackRock GF Latin American and Schroder ISF Latin American funds with returns of more than 12 per cent each.
The worst performer of July was the £90.2m Invesco Perpetual Japanese Smaller Companies managed by Osamu Tokuno, which lost 5.97 per cent during July. So far this year the fund is in positive territory returning 4.35 per cent compared with a 3.50 per cent gain for the average IA Japanese Smaller Companies fund.
Performance of fund vs sector & benchmark YTD
Source: FE Analytics
The £168.5m L&G UK Alpha Trust also struggled in July, making a 5.41 per cent loss. Manager Rod Oscroft took over the fund at the start of the year following the departure of former manager Richard Penny to CRUX Asset Management.
So far this year, the fund has lost 7.49 per cent compared with a 3.33 per cent gain for the average IA UK All Companies sector fund, which is also the fund’s benchmark.
Other poor performers in July included FE Alpha Manager David Crawford's City Financial Absolute Equity fund, which recorded a loss of 4.78 per cent; Principal GIF Asian Equity, down by 4.64 per cent; and New Capital China Equity, as mentioned above.
Despite taking the top spot with the MFM Junior Oil Trust, a fund managed by Angelos Damaskos also appeared at the bottom of the performance table in July.
Indeed, his £11.9m MFM Junior Gold fund – which focuses on small- and medium-sized companies specialising in identifying, developing and extracting gold and other precious metals – recorded a loss of 5.75 per cent during July.
The Bloomberg Gold Sub index has fallen by 3.94 per cent this year as appetite for the yellow metal has waned against strong performance for the US dollar and the rate-rising environment.
It was joined at the bottom by other precious metal funds such as Old Mutual Gold and Silver, HC Charteris Gold & Precious Metals as well as broader commodity strategy LO Commodity Risk Premia.