The funds surviving a rough month

With a couple of days to go, it looks like only two of the Investment Association (IA) sectors are going to post positive returns in March – Short Term Money Market and Standard Money Market. 

The next best is UK Direct Property, which has still fallen by 1.0%, followed by £ High Yield, down 1.8%. At the opposite end of the spectrum, the UK Smaller Companies sector has lost 11.9% over the last four weeks. 

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Data source: Morningstar. Past performance is not a guide to future performance.

This time last year, we had another difficult month when we were in the midst of the tariff wars. In March 2025, most of the main sectors saw significant falls, with the North American and Technology sectors being hit the hardest. However, a few sectors did make gains, and the overall level of losses was not as severe as we are seeing now. 

This month looks like the worst we have seen since March 2020, when investors suddenly realised the potential magnitude of the Covid-19 pandemic. Although that market correction was fairly severe, it was also short-lived as central banks stepped in to calm the markets. 

This time, the reasons for the downturn are relatively clear – the ongoing war with Iran, the closing of the Strait of Hormuz, and the destruction of oil and gas infrastructure in the region. This has led to rising energy costs, which could result in higher inflation, higher interest rates, and a slowing of the global economy. It is hard to see how the situation will improve until a ceasefire is agreed. 

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Since the US-Israeli airstrikes on 28 February, more than 98% of the funds that we monitor have gone down, and over half are showing month-to-date losses of more than 7%. 

The worst-performing funds are the gold funds from the Specialist sector, with SVS Baker Steel Gold&Precious Mtls B Acc down by more than 28%. 

Worst-performing funds in March

Data source: Morningstar. Past performance is not a guide to future performance.

As we said last week, gold funds have fallen sharply after a strong run.  

This may reflect profit-taking after a “buy the rumour, sell the news” reaction to the escalating conflict.  

A stronger dollar and rising Treasury yields also make gold less attractive, as it does not generate any income.  

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At the same time, oil supply concerns appear to have redirected safe-haven flows from gold towards energy. In addition, falling equity markets can lead to gold being sold to raise cash or meet margin calls, as seen during the Covid sell-off in 2020. 

The strongest performers are energy-focused funds, which have benefited from higher oil prices and concerns over supply disruption in the Middle East. 

Best-performing funds in March

Data source: Morningstar. Past performance is not a guide to future performance.

Although energy funds have done well, WS Guinness Global Energy I Acc is up over 14%, any easing of the conflict could lead to a swift reversal. 

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