Best-performing funds and markets in first half of 2019

by Tom Bailey from Money Observer |

Following an amazing market turnaround, we reveal which funds have done best in the past six months.

As the curtains closed on the first half of the year, markets across the world were in a jubilant mood.

Trade war fears reduced following the agreement of the cease fire between China and the US at the G20 summit, while the change in stance from the Federal Reserve, which went from looking like it would raise interest rates at the start of the year to now looking more likely to cut, has also been warmly received by investors.

All this has helped to push various global stock markets up to their highest since September 2018 – quite a change in sentiment since the start of the year. In this year's market turnaround, who's done the best?

Of the world's major market indices, the best performing since the start of the year has been the Russian Trading System, with a total return of 29.9%.

According to one analyst, this is reflective of pressure on Russian companies to be more generous to shareholders. He notes:

"For example, energy firm Gazprom (LSE:OGZD) hiked its dividend twice in a week, sending its share price soaring."

At the same time, Russian assets have benefited from a spike in oil as well as a recent interest rate cut from the Bank of Russia.

China's CSI 300 was a close second, with a year-to-date return of 27.4%. As we noted earlier in the year, despite fears over the trade war, Chinese equities have been lifted by a renewed stimulus in the form of increased spending and tax cuts at home and a more dovish Federal Reserve abroad.

Meanwhile, the UK's FTSE 100 index has returned 10.1% since the start of the year. While this is a decent result for investors, it has lagged other major markets in relative terms.

The worst performer among major markets has been Japan, albeit with a positive return of 6.6%.

In historical terms that's about the average you'd normally get on equities in a year, so investors shouldn't really be disappointed, particularly as we're still only halfway through the year.

How did funds do?

Unusually, the best performing fund has been an index tracker: Pictet-Russia Index, with a return of 32.15%. The performance of this fund is largely down to the same reasons the Russia Trading System index performed well. However, the passive fund’s return was slightly higher due to following a slightly different index, the MSCI Russia Index.  

The strong performance of Russian equities led to Aberdeen Eastern European Equity making a showing in the top 10 performing funds of the year so far, up 29.9%. The fund has a large exposure to Russian companies such as Lukoil (LSE:LKOD), Yandex (NASDAQ:YNDX) and Sberbank of Russia (LSE:SBER) of Russia.

Disappointingly, China's broad market return was not translated into returns for China-focused funds. The China/Greater China sector produced an average return of 16.45%. No China sector fund, though, was among the top 10 performers.

Elsewhere, heavily represented among the top 10 best-performers in the first half of 2019 are smaller company focused funds. After Pictet-Russian Index, the best performers were Brown Advisory US Smaller Companies and Brown Advisory US Mid-Cap growth, with returns of over 30% each.

Indeed, the best performing sector was North American Smaller Companies, with an average return of 21.52%.

Next on the list was the US-heavy technology and telecoms sector, with a return of 20% followed by the general North America sector with 18.6%. As one analyst notes:

"US and technology funds were dominant."

Also among the top 10 performers was LF Ruffer Gold, returning 29.4%. Lowcock comments: "Its performance reflects the rally in the gold price very recently and the subsequent move up in gold miners which we have seen in the second quarter of the year in particular.

Funds Percentage Return
Pictet Russia Index 32.15
Brown Advisory US Smaller Companies 31.31
Brown Advisory US Mid-Cap Growth 31.28
Aubrey Global Conviction 30.37
LF Ruffer Gold 29.42
Threadneedle Pan European Focus 29.41
TM Cavendish AIM 29.40
Robeco Global FinTech Equities 29.33
Aberdeen Eastern European Equity 29.29
Legg Mason IF Martin Currie European Unconstrained 29.24

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

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.

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