Tech-focused funds and gold funds bounced back, while smaller companies continued their fine form.
Smaller companies provided some of the best returns in April, with both the UK and European smaller company fund sectors being the best performing in the month.
Figures from FE Analytics, compiled by Shore Financial Planning, show that the European Smaller Companies sector topped the sector tables, rising almost 7% in April. This was closely followed by UK Smaller Companies with a 6.9% gain.
According to Ben Yearsley from Shore Financial Planning, this strong performance from smaller companies can be attributed to the continued strong outlook for economic growth. He notes: “With economic forecasts being revised upwards in the UK, it is no surprise seeing smaller companies doing well. They should be prime beneficiaries of one of the best growth outlooks in decades.”
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Yearsley, however, warns that many investors often do not have enough smaller company exposure in their portfolio. He says: “Many investors are underweight smaller companies, both domestically and overseas [and] this could cost them in 2021.”
Other top-performing fund sectors were Technology & Telecommunications, with an average return of 5.6%, and North America and Property Other with respective returns of 5.1% and 4.8%.
The strong performance of Technology and Telecommunications is notable. The sector was one of the worst performing in March, losing 4.6%. This was largely driven by the rotation of investors away from growth stocks towards more value and cyclical stocks since November, in line with brightening global economic outlook. The rebound in tech fund performance, therefore, potentially suggests an end of the market ‘reversion’. However, it is really still too early to tell.
In terms of individual funds, the best performance came from Downing UK Micro Cap, which returned over 21%. According to Yearsley, the fund was “boosted by one of the top holdings, Real Good Food (LSE:RGD), repaying loan notes held by the fund”.
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Other notable strong-performance funds featuring in the top 10 include Baillie Gifford’s Healthcare Innovation, as well as Baillie Gifford American. These funds are heavily weighted towards tech and growth stocks.
Also notable was the rebound in performance of gold funds. Gold funds featured heavily among the worst performers in March. However, in April several of these same funds were among the best performing, such as Jupiter Gold & Silver, with a return of 11.2%. This suggests potentially several things: investors are becoming less concerned about rising rates, investors are fearing inflation, and investors are becoming slightly more bearish on the back of a resurgence of Covid-19 in large countries such as Brazil and India.
Top 10 performing funds in April 2021
|Downing UK Micro Cap||21.35|
|Baillie Gifford’s Healthcare Innovation||13.54|
|Liontrust Global Alpha||11.22|
|Jupiter Gold & Silver||11.2|
|Liontrust Global Technology||10.74|
|Baillie Gifford American||10.39|
|Montanaro Global Select||10.17|
|Axiom Concentrated Global Growth Equity||9.85|
|BlackRock World Mining||9.76|
Bottom 10 performing funds in April 2021
|Aberdeen Standard Indian Equity||-4.46|
|Aberdeen Standard Strategic Investment Allocation||-4.32|
|FSSA Indian Subcontinent||-4.05|
|Pictet Indian Equities||-3.95|
|Oyster Japan Opportunities||-3.65|
|Standard Life Japan||-3.5|
|Clear Peak UK Long Short Equity||-3.49|
|Nomura Japan High Conviction||-3.48|
Performance figures from 31 March 2021 to 30 April 2021. Source: FE Analytics
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