The best-performing funds so far this year were bottom of the pile in 2020.
Three key themes dominate the top-performing funds and trusts in the first half of 2021: energy, smaller companies and private equity.
As the tables below show, four of the top six fund performers invest in energy shares. Such funds and the shares they back have benefited from the near 50% rise in the oil price over the six-month period. The best performer – Schroder ISF Global Energy – is up 41.5%.
Schroder ISF Global Energy and Guinness Global Energy, in third place, were 2020’s worst performers, with falls of more than 30% each. This reflected a challenging year in which the oil price slumped.
Smaller company funds are also well represented in the top 10 performers, with three UK strategies featuring: Liontrust UK Micro Cap, Aberforth UK Smaller Companies and Castlefield B.E.S.T Sustainable UK Smaller Companies. In addition, Legg Mason Royce US Small Cap Opportunity is also present.
For investment trusts, three that specialise in hunting for ‘hidden gems’ in the smaller company space are among the top 10 performers: Chelverton Growth Trust (LSE:CGW), Chelverton UK Dividend Trust (LSE:SDV) and River & Mercantile UK Micro Cap (LSE:RMMC).
The trio comfortably outpaced the 19.8% return for the FTSE Small Cap Index.
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The best performer, however, is Electra Private Equity (LSE:ELTA), which has seen its share price rise by 124.6%. It is joined by BMO Private Equity Trust (LSE:BPET) in the top 10, up 43.8%. Private equity investment trusts, with their specialist managers and closed-ended structure, are a way to access the hard-to-reach and illiquid part of the market that is unlisted companies. In addition, it is an area where there’s scope for dramatic uplifts when trusts sell successful holdings.
The rest of the top 10 trust performers since the start of the year is dominated by highly specialist strategies, which alongside the energy funds can blow both hot and cold in terms of performance. As an example, Geiger Counter (LSE:GCL), which invests in uranium shares, is up 159% over five years but down 50% over 10 years. With such special strategies, it is important for investors to understand the risks involved and limit exposure.
Top 10 best-performing active funds in first half of 2021
|Fund||Total return (%)|
|Schroder ISF Global Energy||41.5|
|GS North America Energy & Infrastructure||37.4|
|Guinness Global Energy||35.4|
|Consistent Opportunities Unit Trust||33|
|Aberforth UK Small Companies||32.9|
|BlackRock World Energy||31.5|
|Liontrust UK Micro Cap||31.4|
|Legg Mason Royce US Small Cap Opportunity||30.1|
|Castlefield B.E.S.T Sustainable UK Smaller Companies||29.7|
|VT De Lisle America||29.6|
Source: FE Analytics. Data from 1 January 2021 to 1 July 2021.
Top 10 best-performing investment trusts in first half of 2021
|Investment trust||Total return (%)|
|Electra Private Equity||124.6|
|Drum Income Plus Reit||99.3|
|Chelverton Growth Trust||62.5|
|JZ Capital Partners||52.2|
|Chelverton UK Dividend Trust||44.2|
|BMO Private Equity Trust||43.8|
|Ingot Capital Management Property Limited UIL Limited||43.7|
|River & Mercantile UK Micro Cap||40.7|
|Vietnam Holding Limited||38.5|
Source: FE Analytics. Data from 1 January 2021 to 1 July 2021. VCTs and unclassified sectors excluded.
Gold funds fall out form
At the other end of the table, gold funds lost their lustre in the first half of 2021 and were among the worst performers. ES Baker Steel Gold & Precious Metals, LF Ruffer Gold and Ninety One Global Gold are down 14.3%, 13.1% and 12%.
The sluggish performance for such funds comes despite increasing investor concerns over higher inflation. In theory, rising levels of inflation should bode well for gold. The precious metal has historically provided a hedge against inflation. This is because governments and central banks cannot simply print more gold, as they can currencies. As a result, its value is preserved.
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Investors in the LF Equity Income fund, formally named the LF Woodford Equity Income fund and managed by Neil Woodford, have so far received around 80% of the assets from payments following sales of the fund's holdings.
For investment trusts, specialist strategies dominated the worst performers, with the bottom three being DP Aircraft I Limited (LSE:DPA), NB Distressed Debt Investment and Amedeo Air Four Plus Limited (LSE:AA4), with losses of 40%, 30.1% and 25.6%.
DP Aircraft I Limited and Amedeo Air Four Plus are aircraft leasing funds, while NB Distressed Debt Investment backs “stressed, distressed and special situation credit-related investments”. Both were the worst-performing trusts of 2020.
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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.