Interactive Investor

How the fund and trust winners of 2020 have fared so far this year

13th July 2021 13:52

Kyle Caldwell from interactive investor

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Most of last year’s top performers have seen their returns cool. 

Most top-performing funds and investment trusts in 2020 underperformed their respective sectors in the first half of this year, research by interactive investor has found.

Overall, only seven of the 20 funds and investment trusts outperformed their respective sectors over the six-month period. Five of the 13 underperformers produced negative returns, figures from FE Analytics show. 

In many cases this can be attributed to the market rotation that has been taking place since last November’s vaccine announcements. The rotation has reversed the decade-long trend of growth shares outperforming value shares. It is anyone’s guess whether value will continue to have the upper hand for a sustained period of time, but if this does continue to play out it will prove to be a headwind for funds investing in growth shares.

Five funds run by Edinburgh-based Baillie Gifford featured in the top 10 fund performers of 2020. Just one has outperformed its sector over the past six months – Baillie Gifford Positive Change – which is up 11.6% versus 10.7% for the average global fund. The firm’s three other global funds have underperformed: Baillie Gifford Long Term Global Growth, Baillie Gifford Global Stewardship and Baillie Gifford Global Discovery. The latter has fallen short the most, up just 1.2%.

Baillie Gifford describes its growth approach as “looking ahead five years and longer, seeking out companies that we believe can at least double earnings in this time frame, and that will still be growing rapidly when they get there. Ideally, we look for at least the possibility of much more.”

T. Rowe Price Global Technology Equity managed to buck the trend, despite tech shares being caught up in the market rotation. The fund returned 12.1% versus 10.8% for its sector – technology and telecommunications.

Four US funds that were in the top 10 performers of 2020 all underperformed in the first half of this year: Baillie Gifford American, Morgan Stanley US Growth, Morgan Stanley US Advantage and Premier Miton US Smaller Companies.

The remaining fund – MFM Junior Gold – was the worst performer in the first half of this year, down 6.9%. Gold funds mainly invest in gold mining companies, which tend to rise and fall more than the gold price. 

It is worth pointing out that the specialist sector, which MFM Junior Gold sits in, contains various specialist fund strategies, so its performance comparison against this sector should be taken with a pinch of salt.

How top 10 funds of 2020 have fared so far in 2021 

Fund Return (%) Fund sector (IA*) Sector average (%)
Baillie Gifford American 12.2 North America 14
T. Rowe Price Global Technology Equity 12.1 Technology & Telecommunications 10.8
Morgan Stanley US Growth 11.9 North America 14
Baillie Gifford Positive Change 11.6 Global 10.7
Baillie Gifford Long Term Global Growth Investment 10.1 Global 10.7
Baillie Gifford Global Stewardship 7.8 Global 10.7
Morgan Stanley US Advantage 5.5 North America 14
Premier Miton US Smaller Companies 5.1 North American Smaller Companies 12.4
Baillie Gifford Global Discovery 1.2 Global 10.7
MFM Junior Gold -6.9 Specialist

7.3

Source: FE Analytics. Performance period 1 January 2021 to 1 July 2021. *IA stands for Investment Association. 

Investment trusts fared better, with half continuing to outperform 

Investment trusts fared better than funds, with five of the top 10 performers from 2020 outperforming their respective sector in the first half of this year.

Pacific Horizon (LSE:PHI), Fidelity China Special Situations (LSE:FCSS) and Scottish Mortgage (LSE:SMT) led the pack, with returns of 14.1%, 11.5% and 9.6%. The trio have outperformed their respective sectors.

Scottish Mortgage’s share price hit a wobble earlier this year, with the trust caught up in the wider tech sell-off from mid-February to early March. Its share price has been making up ground since then and is currently trading just below 1,300p per share. From peak to trough during its sell-off (the shares fell from 1,415 to a low of 950p), the price declined by 30%.

The other two trusts that outperformed their sectors over the past six months were Pershing Square Holdings (LSE:PSH) and JPMorgan China Growth & Income (LSE:JCGI).

The remaining five trusts all underperformed: Baillie Gifford US Growth Trust (LSE:USA), Allianz Technology (LSE:ATT), Edinburgh Worldwide (LSE:EWI), Golden Prospect Precious Metals (LSE:GPM) and The Biotech Growth Trust (LSE:BIOG).

How top 10 investment trusts of 2020 have fared so far in 2021 

Investment trust Return (%) Trust sector (*AIC) Sector average (%)
Pacific Horizon 14.1 Asia Pacific 6
Fidelity China Special Situations 11.5 China/Greater China 5.2
Scottish Mortgage 9.6 Global 7.1
Baillie Gifford US Growth Trust 7.9 North America 15
JPMorgan China Growth & Income 6.3 China/Greater China  5.2
Pershing Square Holdings 5.6 Hedge Fund  3.9
Allianz Technology -0.8 Technology & Media 7.1
Edinburgh Worldwide -4.5 Global Smaller Companies 7.6
Golden Prospect Precious Metals -5.1 Commodities & Natural Resources 23
The Biotech Growth Trust -10.4 Biotechnology & Healthcare -0.7

Source: FE Analytics. Performance period 1 January 2021 to 1 July 2021. *AIC stands for Association of Investment Companies.  

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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.

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