Interactive Investor

The best and worst funds so far in 2022

6th July 2022 11:34

Faith Glasgow from interactive investor

Energy funds lead the charts, while tech and Russia trail in the first six months of the year.

It’s not hard to guess which sector dominated the top performers among open-ended funds in the first six months of the year

Energy prices were already rising as post-lockdown demand increased faster than global supplies. But Russias invasion of Ukraine in February, and the disruption of regional fuel supplies as bans and cutbacks on Russian oil came into force, massively exacerbated that trend.

So, while UK petrol and diesel prices are pushed to all-time highs, energy and commodities funds have been going gangbusters, with massive gains as crude oil prices rocketed.

The sector accounts for three-quarters of the top 20 open-ended funds ranked by their six-month performance. The three top performers, all US energy exchange-traded funds (ETFs), have returned a meaty 50%. Even those at the lower end of the top 20 are sitting comfortably on returns in the upper 20s and low 30s.

It’s interesting, in this context, to note the predominance of passive funds that simply track oil & gas stocks. Six of the top eight funds in the table are ETFs, underlining their relative strength compared with actively managed funds when a whole commodity market goes through the roof.

Top-performing active funds include Goldman Sachs’ US energy infrastructure vehicle, marginally ahead of BlackRock World Energy, which has returned 38%.

The impressive six-month returns highlighted in the table have been achieved despite some volatility in June, with falls of up to 15% over the past month for dedicated energy sector funds, perhaps reflecting investors’ concerns around the growing threat of a global economic slowdown.

Top 20 funds

Fund  6m 1yr 3yr 5yr 10yr
iShares S&P 500 Energy Sector ETF (LSE:IESU) 50.02 61.81 40.5 48.7  
SPDR® S&P US Energy Select Sector ETF (LSE:SXLE) 49.98 60.94 42.74 51.37  
Xtrackers MSCI USA Energy ETF (LSE:XUEN) 49.32 59.95 36.59    
7IM Absolute Return 42.95 26.02 27.85 35.2 62.57
Xtrackers MSCI World Energy ETF (LSE:XDW0) 41.57 53.05 27.43 43.57  
SPDR® MSCI World Energy ETF (LSE:WNRG) 41.49 52.9 27.09 43.23 62.03
AQR Systematic Total Return UCITS 40.85 47.35 32.96 23.09  
iShares Oil & Gas Exploration & Production ETF (LSE:IOGP) 39.24 58.54 47.87 55.46 32.5
GS North America Energy & Energy Infrastructure Equity Portfolio 38.91 48.97 41.2 52.01  
BlackRock BGF World Energy 38.05 54.39 32.88 42.87 36.06
Vontobel Commodity  36 42.81 76.8 72.69 26.12
Jul Baer Multicooperation SICAV GAM Commodity  35.58 48.19 77.06 72.98 23.88
7IM Income Portfolio 34.82 15.97 12.04 17.41 51.77
Winton Trend (UCITS) 32.98 36 46.25    
AQR Managed Futures UCITS  32.71 22.35 21.1    
Schroder ISF Global Energy 31.82 43.61 17.9 5.2 -34.43
Guinness Global Energy 30.84 43.04 13.37 21.74 26.39
TB Guinness Global Energy 30.49 45.57 19.18 45.4 0.68
SPDR® MSCI Europe Energy ETF (LSE:ENGY) 27.56 42.81 10.01 44.91 75.66
LO Commodity Risk Premia 27.14 42.6 54.58 63.77 36.5

Source: FE FUNDINFO. 1 Jan 2022 to 30 June 2022. Past performance is not a guide to future performance.

There’s more diversity at the bottom of the table – although again that’s hardly surprising given events in Ukraine and their negative implications for investments in both Russia and the wider Eastern European region, not to mention the painful rotation away from growth-focused investments over recent months.

The biggest losses were sustained by a specialist digital assets and blockchain ETF by passive fund provider HANetf, which has lost two-thirds of its value as the crypto market crashed over the past three months in the face of mounting global economic pressures.

HAN also occupies the second-worst slot, with an ETF following global online retail stocks that has lost 59%, while its Purpose Enterprise Software ESG-S ETF (LSE:SOFT) sneaks in at 20th place, having declined by 37%.

Those three are the only passive funds in the bottom 20 line-up, but the travails of technology stocks in general have clearly impacted on many of the trailing actively managed funds.

The most obvious is T Rowe Price Global Technology Equity, but there are also no less than nine US and global growth funds among the outliers, including Baillie Gifford American and five Morgan Stanley offerings.

To put the importance of tech stocks into context, Morgan Stanley’s US Growth, US Advantage and Global Insight funds all comprise between 47% and 49% in tech investments.

Their presence at the very bottom of the performance tables is a stark reminder of just how far those highly valued US growth stocks that did so well during the pandemic have fallen as the economic environment has deteriorated and interest rates have started to rise.

This poor return came even though sterling has declined against the dollar by 14% since the start of the year, which boosts the value in pounds of investments in dollars. The pound is now lower than at the start of the pandemic in March 2020, in the face of growing fears of a UK recession and a flight to the perceived safety of the US dollar.

The biggest regional loser has been Liontrust Russia, down by more than 50% over the past half year. Dealing in the fund has been suspended since March, following the closure of the Moscow Stock Exchange and the ban on foreign investors trading in local Russian securities, which prevented the fund trading normally. 

A couple of Eastern European funds, including the tiny £6 million offering from Fiera Capital and Fidelity’s EMEA fund, which has some Russian exposure, have suffered similarly large falls.

Top 20 bottom funds

Fund  6m 1yr 3yr 5yr 10yr
HAN ETC Group Digital Assets & Blockchain Equity UCITS ETF -66.89        
HAN Global Online Retail UCITS ETF -59.26 -72.38      
Fiera Capital Europe Magna Eastern European -52.99 -52.86 -47.82 -39.87 -35.46
Liontrust Russia -52.63 -49.99 -41.23 -10.11 0.75
MS INVF US Growth -52.53 -56.52 -4.82 47.45 302.24
Nikko AM ARK Disruptive Innovation -51.39 -63.11      
Morgan Stanley US Advantage -49.45 -54.14 -18.26 21.53 198.83
Baillie Gifford American -48.6 -55.99 9.48 69.76 318.93
Fidelity Emerging Europe Middle East and Africa  -48.42 -47.84 -34.73 -24.58 11.08
Morgan Stanley Global Insight -48.15 -56.23      
Morgan Stanley US Advantage -47.16 -52.67 -18.8 19.22  
T Rowe Price Global Technology Equity -46.8 -48.76 1.49 31.63  
T Rowe Price Global Technology Equity -45.17 -48.01 2.01 34.4  
Multipartner SICAV Baron Global Advantage Equity -41.58 -45.43 9.92 70.17 284.13
Thesis Eldon -39.58 -36.4 1.54 26.38 191.77
Baillie Gifford European -39.32 -39.23 3.39 14.54 179.31
iMGP US Small & Mid Company Growth -39 -33.87 -6.68 10.94 153.02
Baillie Gifford Long-Term Global Growth Investment -37.67 -42.06 36.09 89.8  
MS INVF Global Opportunity -37.02 -39.13 0.05 42.35 312.97
HANetf Purpose Enterprise Software ESG-S ETF (LSE:SOFT) -37.01        

Source: FE FUNDINFO. 1 Jan 2022 to 30 June 2022. Note: some funds appear in the table twice owing to fee/share class variations. Past performance is not a guide to future performance.

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