The fund winners and losers in September 2020
The top-performing fund in September gained 15%, but UK funds were once again in the red.
6th October 2020 10:37
by Hannah Smith from interactive investor
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The top-performing fund in September gained 15%, but UK funds were once again in the red.
All things Japanese topped the performance tables during September, while energy and UK equity funds languished.
Japan was the best performing major market during September, with the Topix rising 1.17% when every other major index posted a negative return, while the yen climbed against the pound, a move that benefited UK investors.
Some 33 of the top 40 performing funds in September were those investing in Japan, notes Shore Financial Planning director Ben Yearsley, who ran the data. Eight of the top 10 invested in either Japan or Japanese smaller companies, with groups including Invesco, Legg Mason, JP Morgan and Aberdeen Standard making the list of top performing funds.
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Top 10 funds in September
| Funds | Return (%) |
|---|---|
| Baillie Gifford Japanese Smaller Companies | 15.16 |
| Invesco Japanese Smaller Companies | 13.19 |
| Legg Mason IF Japan | 12.62 |
| JPM Japan | 10.79 |
| Polar Capital Biotechnology | 10.53 |
| Comgest Growth Japan | 10.46 |
| New Capital Japan Equity | 10.45 |
| Aberdeen Standard Japanese Smaller Companies | 10.3 |
| Pictet Biotech | 9.85 |
| T Rowe Price Japanese Equity | 9.74 |
Source: FE Analytics. Table returns 31 August 2020 to 30 September 2020.
The top-performing open-ended fund over the month was Baillie Gifford Japanese Smaller Companies, with an impressive 15% return. The Scottish asset manager was also responsible for the best-performing investment trust in September, the Japan-focused Baillie Gifford Shin Nippon (LSE:BGS) trust, which returned more than 20%.
Japanese Smaller Companies, Japan, and Asia Pacific Including Japan were the top three Investment Association sectors for the month, with UK Gilts and UK Index Linked Gilts completing the top five. Japanese Smaller Companies and Japan were the two best-performing investment trust sectors.
Top five fund sectors in September
| Fund sectors | Return (%) |
|---|---|
| Japanese Smaller Companies | 9.88 |
| Japan | 6.39 |
| Asia Pacific Including Japan | 4.34 |
| UK Index Linked Gilts | 3.58 |
| UK Gilts | 2.53 |
Source: FE Analytics. Table returns 31 August 2020 to 30 September 2020.
“Are there good reasons for this Japanese dominance?” asks Yearsley. “A cheap stock market, well-capitalised companies, innovative technology, and political stability - even though there was a new prime minister - might have something to do with it.”
The funds in the doldrums
On the flip side, UK equity funds struggled the most over the month, with the bottom four fund sectors all UK-focused. UK Equity Income was the worst performer, even with the outlook for dividends appearing less dire that it was a few months ago.
Bottom five fund sectors in September
| Fund sectors | Return (%) |
|---|---|
| UK Equity Income | -2.3 |
| UK All Companies | -1.76 |
| UK Equity & Bond Income | -1.56 |
| UK Smaller Companies | -1.2 |
| Property Other | -0.88 |
Source: FE Analytics. Table returns 31 August 2020 to 30 September 2020.
Ninety One UK Special Situations and Aviva UK Listed Equity High Alpha were two UK funds that suffered most over the month. Yearsley says markets appear sanguine about the possibility of a second lockdown in the UK, while stocks appear cheap and unloved.
“The UK’s weak performance will continue until either there is a Covid-19 vaccine or a Brexit deal with the European Union is signed. In reality, probably both are needed. One fund manager recently described the UK as having ‘Brovid’ issues,” says Yearsley. “As ever, it pays to have a diversified portfolio and it can be too easy to write markets off that have underperformed for a long period. This feels the case with the UK currently.”
Energy funds also struggled in September, with Schroder Global Energy posting the worst performance during September, falling more than 15%. TB Guinness Global Energy, BlackRock GF World Energy, and GS North American Energy & Energy Infrastructure also featured among the month’s bottom 10 funds.
Bottom 10 funds in September
| Funds | Return (%) |
|---|---|
| Schroder ISF Global Energy | -15.43 |
| TB Guinness Global Energy | -12.17 |
| Blackrock GF World Energy | -10.35 |
| HSBC GIF Brazil | -7.89 |
| VT Cape Wrath Focus | -7.85 |
| Ninety One UK Special Situations | -7.6 |
| GS North American Energy & Energy Infrastructure | -7.35 |
| Aviva UK Listed Equity High Alpha | -7.28 |
| Man GLG Undervalued Assets | -7.07 |
| Pictet Russia Index | -6.57 |
Source: FE Analytics. Table returns 31 August 2020 to 30 September 2020.
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