Interactive Investor

The tide has turned: best and worst funds since start of 2022

21st February 2022 13:24

Douglas Chadwick from ii contributor

The best-performing funds of recent years have come off the boil. Saltydog analyst runs through the winners and losers in the market rotation. 

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Although it is still early days, it feels as though this year’s investment challenges could be very different from both 2020 and 2021.

At the beginning of last year, we were still in lockdown and the focus was on fighting Covid-19 and rolling out the vaccine. Governments and central banks were still pumping money into the system to keep economies afloat and were happy to keep interest rates at record lows. On the whole, stock markets performed well and some of the funds that we monitor made more than 30% over the year.

This year, the focus is on ‘living with Covid’. In the last few months, inflation has risen to the highest level in decades and central banks are no longer willing to sit on the sidelines. The Bank of England has already put interest rates up twice and investors are expecting the US Federal Reserve to follow suit in the not-too-distant future. In this moving economic climate, we would expect to see new funds rising to the top of our tables.

Our two demonstration portfolios (Tugboat and Ocean Liner) started to adapt in the fourth quarter of 2021. Since then, we have sold all the funds that we were holding at the beginning of the year, including one that we had been in since April 2020; Janus Henderson Global Responsible Managed fund. Although we are still predominantly in cash, we have made a few new investments this year.

The best-performing funds so far this year have taken advantage of the dramatic rise in fuel prices. The Schroder ISF Global Energy and TB Guinness Global Energy funds have both gone up by more than 17% since the beginning of January.

Best-performing funds so far in 2022 (01/01/2022 - 19/02/2022)

Name Investment Association (IA) sector Return (%)
Schroder ISF Global Energy Global 17.4
TB Guinness Global Energy Commodities and Natural Resources 17.0
JPM Natural Resources Commodities and Natural Resources 12.4
VT Argonaut Absolute Return Targeted Absolute Return 11.1
BlackRock Natural Resources Commodities and Natural Resources 10.8
Liontrust Latin America Latin America 9.7
ASI Latin American Equity Latin America 9.4
Invesco Latin American Latin America 8.4
Man GLG Japan CoreAlpha Japan 7.9
MI Thornbridge Global Opps Global 7.8

Source: Morningstar. Past performance is not a guide to future performance.

We currently hold the TB Guinness Global Energy fund in both our portfolios. It is a relatively small fund, less than £100 million, and it aims to achieve “long-term capital growth by investing in the shares of companies engaged in the oil and gas sector, energy generation and transmission”.

It can also invest in firms seeking to develop and exploit new energy technologies, but its largest holdings are still in the big oil companies such as Total, Chevron (NYSE:CVX) and Exxon Mobil (NYSE:XOM).

Further down the list are a couple of funds from the Commodities and Natural Resources sector; JPM Natural Resources, which also features in our portfolios, and BlackRock Natural Resources.

At the opposite end of the spectrum are a number of funds that have gone down by 20% or more.

Worst-performing funds so far in 2022 (01/01/2022 - 19/02/2022)

Name Investment Association (IA) sector Return (%)
Baillie Gifford American North America -28.4
T. Rowe Price Global Technology Technology and Technology Innovations -24.3
Baillie Gifford Long-Term Global Growth Global -22.4
FSSA Japan Focus Japan -21.4
Baillie Gifford European Europe Excluding UK -21.3
FTF Martin Currie Japan Equity Japan -20.7
Baillie Gifford Global Discovery Global -20.4
Aegon Sustainable Equity Global -20.4
ASI Global Smaller Companies Global -20.3
Aegon Global Sustainable Equity Global -19.9

Source: Morningstar. Past performance is not a guide to future performance.

The worst is the Baillie Gifford American fund. It was the best-performing fund in 2020 when it went up by more than 100%, this year it is currently down 28%. It just goes to show how the tide can turn.

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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.

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