Interactive Investor

Eight global funds that topped the charts in falling and rising markets

We looked for global funds in the top 10% of performers in last year’s sell-off and the market recovery.

22nd June 2021 10:00

Kyle Caldwell from interactive investor

We looked for global funds in the top 10% of performers in last year’s sell-off and the market recovery. These are the only funds that did it.

A small number of global funds produced table topping performance in the Covid-19 market sell-off and the subsequent recovery that has taken place since last April, research by interactive investor has found.

We looked at the Investment Association’s global sector and screened for active funds that were in the top 10% performers in both the first quarter of 2020 and from 1 April 2020 to 1 June 2021, a period in which markets have been in recovery mode.

The vast majority of funds failed to be among the top performers over both timeframes as just eight funds out of over 400 in the sector made the grade.

The eight funds, the performances of which are detailed in the table below, are: Baillie Gifford Long Term Global Growth Investment, Baillie Gifford Positive Change, PGIM Jennison Global Equity Opportunities, GAM Star Disruptive Growth, Goldman Sachs Global Millennials Equity Portfolio, Baillie Gifford Global Discovery, Aegon Global Sustainable Equity and Baillie Gifford Global Stewardship.

The research shows only a very small percentage of funds over those two time periods have both strongly protect capital when markets fell notably and been a top performer in the recovery phase.

As ever it is important for fund investors to look under the bonnet to understand how a fund is expected to perform in different market environments.

Some funds prioritise protecting capital, so therefore will in theory fall less heavily than the majority of other funds when markets fall suddenly and quickly. But the trade-off is that in a market recovery the more defensively focused funds will lag the pack.

Other funds are, due to the way they invest, more adventurous. These funds are likely to be among the heaviest fallers when markets are in freefall, but when markets are on risk-on mode have more chance of outperforming. Such funds tend to invest in smaller companies or have a value focus – seeking out cheap shares that could potentially recover.

In the first quarter of last year the average global fund fell by 15.4%. In the recovery phase, from 1 April 2020 to 1 June 2021, the average fund is up 50.1%. Overall, from the start of 2020 to 1 June 2021, the average fund is up 23.1%.

The best-performing passive fund in the sell-off was L&G Pharma Breakthrough ETF (LSE:BIGT), which fell by just 4.9%. But it has lagged since the start of last April onwards, up 19.7%.

Since the start of 2020 two of the funds in the table below are among the top five performers in the global sector for both active and passive strategies. Baillie Gifford Long Term Global Growth has been the best performer, up 94.8%, followed by Baillie Gifford Positive Change, with gains of 84.5%.

The other three in the top five invest in a specific theme or part of the market that has fared very well during the recovery period from last April onwards. Over the same timeframe the second-best overall performer is L&G Battery Value-Chain ETF (LSE:BATT), up 93%. In four and fifth place with respective returns of 82% and 78.5% are iShares Global Clean Energy ETF (LSE:INRG) and Guinness Sustainable Energy.

Funds in top 10% of performers during sell-off and recovery that followed 

Fund Performance (%) in falling market* Performance (%) in rising market**
Baillie Gifford Long Term Global Growth Investment -0.1 94.9
Baillie Gifford Positive Change -5.2 94.6
PGIM Jennison Global Equity Opportunities -8.5 71.9
GAM Star Disruptive Growth -8.7 80.7
GS Global Small Cap Core Equity Portfolio -9.5 71.6
Baillie Gifford Global Discovery -9.9 81.4
Aegon Global Sustainable Equity -10.4 76.2
Baillie Gifford Global Stewardship -10.5 91.5
Investment Association global sector average -15.4 50.1

Source: FE Analytics. *Falling market period from 1 January 2020 to 1 April 2020. ** Rising market period from 1 April 2020 to 1 June 2021. 

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