Nine in 10 of best-performing funds in August invest in this region

This country’s index hit a record high in August, which in turn boosted returns for active funds. 

Stock markets around the world generally performed well in August, with most major indices edging higher. This fed into the performance of open-ended equity funds, with many posting positive returns for the month.

However, in terms of the best performing, one region dominated: India. Of the 10 best-performing funds in August, nine had an exclusive focus on India. The best performing was Aberdeen Standard Indian Equity, with a return of 11.2%. 

Indian equities saw strong returns in August. Indeed, it was the best month so far this year for India’s S&P BSE SENSEX, which finished at an all-time record high.

• How to invest in emerging markets using ETFs: a beginner’s guide
• Pros and cons of investment trusts and ETFs for thematic investing

Ben Yearsley, director of Shore Financial Planning, notes: “There doesn’t seem to be any specific catalyst for India’s strength apart from a resilient economy in the face of the Delta Covid variant (which now seems under control). Inflation is under control there and by most accounts the monsoon season has been good as well.”

While India dominated the best-performing list, six of the 10 worst-performing funds had an explicit focus on gold and other precious metals. MFM Junior Gold was the third worst-performing fund, with a loss of 9.1%. 

• Three reasons not to use the Dow Jones index
• Diversifying your portfolio is easy with these ii Super 60 recommended funds

Yearsley notes that the reason behind this poor performance is not straightforward. Despite the poor performance of funds with heavy gold exposure, the price of gold did not do very much in August.

He notes: “As the gold price didn’t move in August, there was no real catalyst for the negativity. There was an element of stocks trading ex-dividend (with some very chunky payouts), a slightly stronger dollar, and also the pick-up in bond yields, but overall, there was no big news to affect gold shares.”

The two worst performers were 7IM Income Portfolio and 7IM Absolute Return Portfolio, both of which remain suspended due to liquidity concerns.

Top 10 fund performers in August

Source: FE Analytics. Data from 31 July 2021 to 31 August 2021.

Bottom 10 performing funds in August

Source: FE Analytics. Data from 31 July 2021 to 31 August 2021.