Interactive Investor

10 best and worst-performing funds in 2021

21st December 2021 09:52

Hannah Smith from interactive investor

The top 10 fund performers have returned between 40% and 53%.

One of the biggest stories of the year has been the enormous rise in energy costs, hitting millions of UK households in the pocket, with worse to come next year. But hopefully some of these consumers also held energy funds in their portfolios this year to offset the fuel price rises with some red-hot returns.

Energy and commodity portfolios dominate the list of the 10 best-performing funds of the year. Schroder ISF Global Energy takes the top spot with an impressive 53% return over the year-to-date (to 9 December), while Guinness Global Energy came second with a 50% return. Two energy infrastructure funds from Goldman Sachs and Pimco also feature in the top-performers list.

“In life, for every loser, there are winners,” says Tom Poulter, head of quantitative research at Square Mile Investment Consulting. “The consumer is losing out with higher energy prices but there are some companies and investment funds that have done really well based on that.”

Meanwhile, India has also been a strong equity market this year, returning 29% year-to-date.

“India has done very well, first because prime minister Modi has got a lot of growth policies, and second there are questions over China,” Poulter explains. Investors worried about China tend to move their money to other key high-growth market which is India, and the nation has also benefited from its own increasingly affluent middle-class consumers investing in their own domestic market during lockdown.

Two India funds - Alquity Indian Subcontinent and Nomura India Equity - both make the top 10.

Elsewhere in the list are two frontier markets funds – Fiera Capital Europe Magna New Frontiers and T. Rowe Price Frontier Markets Equity, returning 42% and 40% respectively this year. Poulter explains that frontier markets indices used to be skewed by the presence of oil-producing nations such as Bahrain and Saudi Arabia, but since these have moved up to be classed as emerging markets, frontier market indices have become “more balanced”.

The MSCI Frontier Markets Index returned 23% this year, largely driven by strong performance from Vietnam, which is 30% of the index. “There are a lot of gems in these markets but also a lot of minefields. Both T Rowe Price and Fiera have done well because they’ve been able to pick some good stocks,” he says.

Top 10 overall active funds of 2021* 

Fund  Percentage return (%) 
Schroder ISF Global Energy 53.1
TB Guinness Global Energy 50.1
GS North America Energy & Energy Infrastructure Equity Portfolio  48.8
BlackRock GF World Energy 47.5
Alquity Indian Subcontinent 46.6
Guinness Global Money Managers  45.2
Nomura India Equity  43.3
Fiera Capital Europe Magna New Frontiers  42.1
Pimco GIS MLP & Energy Infrastructure  40.8
T. Rowe Price Frontier Markets Equity 40.1

All data from 1 January 2021 to 9 December 2021. Source: FE Analytics .

Worst funds of 2021

Bottom of the list is the £2 million VT Garraway Absolute Equity, a long/short absolute return fund, which has unfortunately not lived up to its stated objective to deliver a positive absolute return in all market environments, posting a 36% fall to 9 December.

Brazil funds from HSBC and JPM make the losers’ list this year because Latin America has been a tough place to invest, and Brazil in particular has faced political currency issues.

Bottom 10 overall active funds of 2021* 

Fund Percentage return (%)
VT Garraway Absolute Equity -36.1
LF Equity Income -34.4
IFSL SIM Junior Gold & Silver Miners -25.2
HSBC GIF Brazil Equity -24.5
Aviva Investors European Property -23.4
WS Charteris Gold and Precious Metals -21.6
JPM Brazil Equity -20.8
ASI Strategic Investment Allocation  -20.4
Nikko AM ARK Disruptive Innovation -19.9
VT Clear Peak Capital UK Long/Short Equity  -19.7

All data from 1 January 2021 to 9 December 2021. Source: FE Analytics.

Best non-commodity funds of 2021

If we strip out commodity-related funds from the rankings, we see that Indian equity funds and frontier market funds still feature strongly. A handful of US funds also appear in the list – Neuberger Berman Real Estate Securities, VT De Lisle America, and Alliance Bernstein US Small and Mid Cap Portfolio all performed well this year to return around 38% each.

Looking forward, the top and bottom performers of this year are not likely to be the same in 2022, Poulter says.

“If a fund has fallen 30%, it’s difficult to fall 30% again as a lot of that’s priced in. Gas prices have quadrupled over the last six months, it’s unlikely that they will quadruple again. We’ll always see concentration, but you’re unlikely to see the same type of funds performing really well next year,” says Poulter.

He adds: “If you want consistency of returns, being second quartile is better than just focusing on the top-performing funds in any sector. That’s because it’s most likely that the top-performing fund over a 12-month [period] has taken a lot of risk and has a high active share so can easily be bottom quartile the next year. I would say to anyone with a diversified portfolio: don’t chase the winners.”  

Top 10 active equity funds of 2021 that are not commodity specialists*  

Fund  Percentage return (%) 
Alquity Indian Subcontinent 46.6
Guinness Global Money Managers  45.2
Nomura India Equity  43.3
Fiera Capital Europe Magna New Frontiers  42.1
T. Rowe Price Frontier Markets Equity 40.1
VT De Lisle America 38.7
AB US Small & Mid Cap Portfolio 38.2
Jupiter India Select 38
NB US Real Estate Securities  37.9
Liontrust India 37.3

All data from 1 January 2021 to 9 December 2021. Source: FE Analytics.

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