A fund that returned 40% last year is up 50% so far in 2020. We explain why and run through whether the other top-performing funds of 2019 have maintained their form.
China, fintech and UK smaller companies funds delivered the best returns for investors last year, but how have these fund stars performed so far in a turbulent 2020?
One fund that was a top performer last year and has continued to shine is DMS Charteris Gold and Precious Metals. It delivered 40% in 2019 and is so far this year up more than 50%.
Gold price hits a new record
With investor fears about the impact of the pandemic on human life, the economy and stock markets, gold is shining as a safe haven once more. The gold price topped $2,000 an ounce last week for the first time ever as investors awaited a fresh US stimulus package to help combat the effects of Covid-19 on the economy.
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The record-breaking move follows a 35% rise in the gold price so far this year.
“As one of the best hedges against inflation and political risk, gold is particularly attractive in the current times, with governments worldwide engaged in huge money-printing operations,” said David Jane, multi-asset fund manager at Premier Miton Investors.
“Investors are clearly concerned that the level of fiscal expenditure and monetary intervention will have consequences in the long run. We hold a material position in gold at present having built it up at the start of the year, but as pragmatic investors there will also be times when we hold none or little.”
US and UK investors are driving the surge in interest in gold as they try to mitigate political concerns, adds Adrian Ash, director of research at BullionVault, and this means the yellow metal could continue its meteoric rise. “While the initial shock of the Covid-19 crisis is retreating, the appeal of gold as a tool for spreading investment risk continues to shine as the pandemic’s long-term economic damage becomes clear.
“New interest in buying gold has jumped most notably in the US and the UK, where private investors are now less than 100 days away from Election 2020 and 150 days from the end of the Brexit transition period. Febrile politics are adding to the uncertainty and doubt over a V-shaped recovery.”
China stays strong
China was the epicentre of the pandemic, but its stock market has since recovered strongly, buoyed by positive data from its services sector. Two China funds made the top three strongest-performing funds last year - some good stock selection calls helped power a 51% return for Allianz China A-Shares.
This year, the fund is putting in another strong showing, with a 33% return so far. Another Allianz China fund – Allianz All China Equity – also made last year’s list in third place, and is continuing to do well in 2020, up 32%.
Completing the top three for 2019 was Wellington FinTech, which holds financial services disruptors such as PayPal (NASDAQ:PYPL), WEX (NYSE:WEX) and Global Payments (NYSE:GPN). After returning nearly 42% last year, this year the fund is up 15.8% so far. Technology roared in 2019 due to the strength of the FAANG stocks, and L&G Global Technology Index Trust was another fund that benefited strongly from the trend. In 2020, it has continued to perform well, up 21%.
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The funds falling from grace
But the shine has come off some of the other winners from 2019 – Aberdeen Standard’s UK Smaller Companies fund has sunk to a -11.7% return, while its thematic UK Impact Employment Opportunities fund, investing in companies that promote good employment practices, is down almost 20% year to date. Franklin UK Mid Cap posted almost a 40% return last year, but this year it is down 26.5%. Pictet Russia has dropped from a 40% positive return to -18%, while MFS Meridian US Concentrated Growth has made a slight positive return (of 2.1%) following impressive 37.6% growth in 2019.
Best performers of 2019…
|Best performing||% return|
|Allianz China A-Shares in GB||50.99|
|Wellington FinTech in GB||41.83|
|Allianz All China Equity in GB||41.07|
|ASI UK Smaller Companies in GB||40.95|
|Pictet Russia Index in GB||39.92|
|HC Charteris Gold & Precious Metals in GB||39.56|
|Franklin UK Mid Cap TR in GB||39.26|
|ASI UK Impact Employment Opportunities Equity in GB||38.71|
|MFS Meridian US Concentrated Growth in GB||37.67|
|L&G Global Technology Index Trust in GB||37.62|
Source: FE Analytics. Data from 1 January 2020 to 29 July 2020
...And how they have fared so far in 2020
|Fund name||Total return (%) in 2020*|
|DMS Charteris Gold & Precious Metals||50.39|
|Allianz China A-Shares||33.42|
|Allianz All China Equity||32.03|
|L&G Global Technology Index Trust||21.13|
|MFS Meridian US Concentrated Growth||2.16|
|ASI UK Smaller Companies||-11.70|
|Pictet Russia Index||-18.17|
|ASI UK Impact Employment Opportunities Equity||-19.80|
|Franklin UK Mid Cap||-26.51|
|Source: FE Analytics. Data from 1 January 2020 to 29 July 2020|
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