Specialist funds and trusts hog the performance tables in 2022

In a difficult year, it is niche, specialist strategies that are dominating the top and bottom of the performance tables.

The year-to-date has been a tough place for investors, with only three out of 13 asset classes generating a positive return since the start of the year, according to research from interactive investor, the UK’s second-largest investment platform for private investors.

In this difficult year, it is niche, specialist strategies that are dominating the top and bottom of the performance tables, highlighting the importance of having a diversified investment strategy.

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Few will be surprised to see Russian-focused strategies languishing at the bottom of the tables. In investment trust land, JPMorgan Emerging Europe, Middle East and Africa is the worst-performing investment trust year to date, down -88%. Prior to 25 November 2022 and a strategy change voted for by shareholders, the trust was known as JPMorgan Russian Securities.

Liontrust Russia Fund is down 56% year to date, third only to Emerging Europe strategies by Schroders and BlackRock. Schroder International Selection Fund Emerging Europe and BlackRock Global Funds Emerging Europe Fund were down -67% and -59% respectively.

Some of the other poorest performers in the investment trust sector year to date have included Seraphin Space, which IPO’d last summer, and Chrysalis and Home REIT, which have grappled with issues over the then performance fee and allegations raised by activist investors respectively.

Niche outperformers

The Leasing and Natural Resources and Commodities sectors have seen the strongest investment performance in 2022, with eight out of the 10 top-performing investment trusts and six out of the 10 top-performing funds appearing in these sectors, according to analysis by interactive investor using Morningstar.

In the investment trust arena, the aircraft leasing sector saw particularly strong performance year to date, although with wide discounts to NAV in this area, it’s a reminder to tread thoughtfully and carefully in these very niche areas. The top-performing trust, DP Aircraft I Ltd (LSE:DPA), saw a market return of 203% in the 11 months to end of November.

BlackRock Global World Energy Fund was the top-performing fund in 2022, giving a total return of 66.92% in the 11 months to end of November. With five other funds in the top 10 also investing in energy, its success reflects the dramatic price rises seen in this space year to date.

Dzmitry Lipski, Head of Funds Research, interactive investor, comments: “This has been the year of the niche, both at the top and bottom end of the performance tables. We should always take short-term performance with a pinch of salt, but this year the data is a salutary reminder about the importance of having a diversified strategy.

“One year’s winners can be next year’s poor performers – and vice versa. A balanced portfolio is so important, and geographically diverse, generalist funds and investment trusts are a great place to start.

“While it is useful to see which funds and sectors have performed well this year, investors should be wary of basing their investment decisions on short-term performance alone. We’ve stellar returns among some aircraft leasing trusts this year as they recover from the turmoil caused by the pandemic, but longer-term, the performance has been less impressive, with top performer, DP Aircraft I Ltd, seeing a loss of 61.56% each year over the last three years.

“The mixed performance of the emerging markets sector, with some funds and trusts appearing in the top 10 performers and others some in the bottom 10, also proves that investment returns depend on a range of factors, including management, geographic, political and economic, which are not always easy to predict. Inevitably, investments will face challenges as well as opportunities, which is why we believe it’s important to spread your money across a mix of different investments that meet your personal appetite for risk.”

Top 10 investment trusts

Source: Morningstar. All returns are to 30/11/2022 – Year to Date / 3 year (annualised) and 5 year (annualised). Past performance is not indicative of future results.

Worst 10 investment trusts

Source: Morningstar.  All returns are to 30/11/2022 – Year to Date / 3 year (annualised) and 5 year (annualised). Past performance is not indicative of future results.

Top 10 funds

Source: Morningstar.  All returns are to 30/11/2022 – Year to Date / 3 year (annualised) and 5 year (annualised). Past performance is not indicative of future results.

Worst 10 funds

Source: Morningstar.  All returns are to 30/11/2022 – Year to Date / 3 year (annualised) and 5 year (annualised). Past performance is not indicative of future results.