Interactive Investor

The best and worst-performing funds of 2023

Saltydog Investor takes stock of the best and worst funds last year, a period in which interest rates, inflation and AI drove markets.

15th January 2024 14:56

Douglas Chadwick from ii contributor

This content is provided by Saltydog Investor. It is a third-party supplier and not part of interactive investor. It is provided for information only and does not constitute a personal recommendation.

Each week we provide our members with up-to-date performance data on a wide range of funds. We do not guarantee that we include all funds, but we certainly cover most UK-domiciled funds available through the most-popular fund supermarkets.

We arrange them in their Investment Association (IA) sectors and then combine the sectors to form our own Saltydog groups.

We use the historic volatility of the sectors to determine which group they end up in. The least volatile sectors are in the “Safe Haven” group. Then there is the “Slow Ahead” group, followed by “Steady As She Goes”, and finally the two “Full Steam Ahead” groups. We report on the Specialist sectors separately.

The groups can be used to help control the overall volatility of a balanced portfolio.

As momentum investors, we are looking for trends in the markets and focus on the relative performance of the sectors. We believe that these reflect the underlying macro-economic conditions around the world. Having selected which sectors to invest in, choosing the best-performing funds is relatively straightforward.

Because our main focus is on the sectors, and we only ever look at the leading funds, it is easy to lose sight of the variance in performance of the funds in each sector. We have examined our analysis for last year and picked out the best and worst fund for each sector. The results are shown in the table below.

Investment Association sectorBest-performing fund in 2023% RtnWorst-performing fund in 2023% Rtn
Safe HavenSafe Haven   
Short Term Money MarketRoyal London Short Term Money Market4.80BlackRock Cash4.56
Standard Money MarketPremier Miton UK Money Market4.70abrdn Sterling Money Market4.65
Slow Ahead    
£ Corporate BondLiontrust SF Monthly Income Bond13.09abrdn AAA Bond P15.51
£ High YieldIFSL Marlborough High Yld Fxd Int15.18BNY Mellon Global High Yield Bond7.99
£ Strategic BondM&G Optimal Income13.53Allianz Strategic Bond-3.61
Mixed Investment 0-35% SharesJupiter Merlin Monthly Income Select10.10AXA Defensive Distribution3.61
Mixed Investment 20-60% SharesRoyal London Sustainable Diversified13.21WS Ruffer Total Return-6.32
Mixed Investment 40-85% SharesLiontrust Balanced20.39Aegon Sustainable Diversified-1.70
Steady as She Goes    
Flexible InvestmentLiontrust Global Alpha20.53Ninety One Glbl Macro Allocation-2.81
UK All CompaniesNinety One UK Special Situations27.35TM Stonehg Fleming Opps-15.17
UK Direct PropertyCT UK Commercial Property3.27CT UK Property Authorised Investment-3.28
UK Equity IncomeJanus Henderson UK Responsible Inc13.10AXA Framlington Monthly Income-5.90
UK GiltsAllianz Gilt Yield4.97Vanguard UK Long Duration Gilt Index1.50
UK Index Linked GiltsM&G Index-Linked Bond1.53Janus Henderson Index-Linked Bond-0.29
UK Smaller CompaniesFidelity UK Smaller Companies10.25Premier Miton UK Smaller Companies-15.72
Global & GEM Bonds*MI TwentyFour AM Monument Bond10.21BNY Mellon International Bond-2.54
Full Steam Ahead - Developed    
Europe Excluding UKBlackRock Continental Europe21.66L&G Future Wld Sust Eurp Eq Foc2.85
Europe Including UKCT Pan Eurpean Focus19.80IFSL Trade Union Unit Trust9.92
European Smaller CompaniesJupiter European Smaller Companies12.90JPM Europe Smaller Companies2.48
GlobalGAM Disruptive Growth36.29AXA ACT Framlington Clean Economy-5.29
Global Equity IncomeInvesco Global Equity Income21.83Sarasin Global Higher Dividend3.64
JapanWS Morant Wright Japan21.43BNY Mellon Jpn Small Cap Equity Focus-16.67
North AmericaNew Capital US Growth49.76JPM US Equity Income-1.64
North American Smaller CompaniesCT American Smaller Coms16.82Schroder US Smaller Companies3.77
Full Steam Ahead - Emerging    
Asia Pacific Excluding JapanJupiter Asian Income9.44Veritas Asian-10.87
Asia Pacific Including JapanInvesco Pacific10.11Baillie Gifford Developed Asia Pacific0.05
China/Greater ChinaFSSA Greater China Growth-13.03abrdn China A Share Equity-29.27
Global Emerging MarketsInvesco Emerging Markets ex China21.75MI Somerset Global Emerg Markets-0.79
Technology and Technology InnovationLiontrust Global Technology58.84AXA Framlington Global Technology32.23
Specialist / Thematic    
Commodities and Natural ResourcesPictet-Clean Energy Transition21.69Barings Global Agriculture-16.14
Financials and Financial InnovationAXA Framlington FinTech15.32Jupiter Financial Opportunities9.59
HealthcareAXA Framlington Health0.56L&G Global Health & Pharma Index-2.07
India/Indian SubcontinentJupiter India31.12Stewart Inv Indian Sbctnt Sustnb14.25
InfrastructureM&G Global Listed Infrastructure-0.22VT Gravis Clean Energy Income-13.55
Latin AmericaCT Latin America Retail21.73Liontrust Latin America17.78

Data source: Morningstar. Past performance is not a guide to future performance.

(*There are some bond sectors where we track only one or two funds, so we have combined all the non-UK bond sectors into our Global & Global Emerging Market Bonds sector).

The “Safe Haven” group only contains two sectors, Short Term Money Market and Standard Money Market. There are very strict rules determining what they can invest in, which means the performance of all the funds is usually fairly similar. Last year the best-performing fund in this group was Royal London Short Term Money Market, up 4.8%, and the worst was BlackRock Cash, but it still went up by 4.6%. The Royal London Short Term Money Market fund was also the best-performing fund in this group in 2022, but then it only went up by 1.4%.

In the “Slow Ahead” group, the best-performing fund last year was the Liontrust Balanced fund from the Mixed Investment 40-85% Shares sector. It rose by more than 20%. The worst-performing fund in the sector, Aegon Sustainable Diversified fell 1.7%. The worst-performing fund in the group was WS Ruffer Total Return, which lost 6.3%.

The Ninety One UK Special Situations fund, from the UK All Companies sector, was the top fund in the “Steady as She Goes” Group, with an annual return of 27.4%. The worst-performing fund in the group, Premier Miton UK Smaller Companies, fell by 15.7%.

The largest sector variance was in the North American sector. The leading fund, New Capital US Growth, gained nearly 50%, and was the top fund in the “Full Steam Ahead – Developed” group. The worst-performing North American fund, JPM US Equity Income, dropped 1.6%. But that was not the worst fund in the group. That spot was taken by the BNY Mellon Japan Small Cap Equity Focus fund, which fell 16.7%.

The largest group variance was in the “Full Steam Ahead – Emerging” group where the Liontrust Global Technology fund made 58.9% and the abrdn China A Share Equity lost 29.3%.

The best-performing fund from the Specialist sectors was Jupiter India with a one-year return of 31.1%.

The top-performing funds will be familiar to our members. They have regularly appeared in our weekly shortlists, and some still feature in our demonstration portfolios.

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These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.