2020 hasn’t been the best of years so far. Bushfires, floods, swarms of locust, pandemics, racism and oil spills have all made the headlines. It’s been almost biblical at times and we’re only half-way through.
It’s been a roller-coaster ride for investors too, who started the year in a bull market, enjoying all-time highs in some areas, only to have global markets plummet between February and March before some then staged a remarkable recovery.
Over the past six months, the best performing sector has been the IA Technology and Telecoms sector, with is up 20.15%*. The IA UK Index Linked Gilts sector is in second place with returns of 12.98%* and IA China/Greater China is in third (12.63%*).
The worst performing sectors have all been UK: The average fund in the IA UK Equity Income sector has posted losses of 19.78%*, while the IA UK All Companies sector is down 17.19%* and the IA UK Smaller Companies sector is down 15.82%*.
There is some good news for UK equity investors in that all three sectors are in the top half of the table when looking at returns since the market lows of 23 March 2020. But the best performing sector has once again been IA Technology and Telecoms (up 37.62%**), followed by IA North American Smaller Companies (37.18%**) and IA European Smaller Companies (35.46%**). The average IA UK Smaller Companies fund was in fourth position up 33.92%**.
The worst performing sectors since the market bottomed have been IA UK Direct Property (down 2.52%**), the two IA Money Market sectors (0.03%** and 0.24%**) and IA UK Gilts (3.07%**).
When it comes to individual funds, however, gold has really shone in recent months. Five of the top 10 funds since the March lows are invested in the precious metal, including Merian Gold & Silver, which is on the Chelsea Selection, and has returned 56.7%**.
Commenting on the outlook for the second half of the year, Darius McDermott, managing director of Chelsea Financial Services, said: “Much will depend on how deep and how long the global recession becomes. While there has been – and there will undoubtably continue to be – central bank and government support, there is bound to be volatility in stock markets.
“At times when the market rallies, equities will make some decent returns, but these good days will no doubt be sandwiched between days when markets fall too, so more defensive assets – such as gold and government bonds – will be important to cushion those falls. As ever, having a diversified portfolio is important.”
|1||IA Technology & Telecommunications||20.15%|
|2||IA UK Index Linked Gilts||12.98%|
|3||IA China/Greater China||12.63%|
|4||IA UK Gilts||9.99%|
|5||IA Global Bonds||5.85%|
|35||IA Property Other||-11.72%|
|36||IA UK Equity & Bond Income||-13.86%|
|37||IA UK Smaller Companies||-15.82%|
|38||IA UK All Companies||-17.19%|
|39||IA UK Equity Income||-19.78%|
|1||IA Technology & Telecommunications||37.62%|
|2||IA North American Smaller Companies||37.18%|
|3||IA European Smaller Companies||35.46%|
|4||IA UK Smaller Companies||33.92%|
|5||IA North America||29.79%|
|35||IA Global Bonds||5.01%|
|36||IA UK Gilts||3.07%|
|37||IA Standard Money Market||0.24%|
|38||IA Short Term Money Market||0.03%|
|39||IA UK Direct Property||-2.52%|
|1||Baillie Gifford American||71.77%|
|2||Ninety One Global Gold||64.41%|
|3||LF Miton UK Smaller Companies||63.84%|
|4||DMS Charteris Gold & Precious Metals||63.28%|
|5||BlackRock Gold & General||62.48%|
|6||Baillie Gifford Global Discovery||59.48%|
|7||Baillie Gifford Global Stewardship||56.93%|
|8||Merian Gold and Silver||56.70%|
|9||Merian UK Mid Cap||54.87%|
|10||Smith & Williamson Global Gold & Resources||54.20%|
*Source: FE Analytics, total returns in sterling, 1 January to 29 June 2020
**Source: FE Analytics, total returns in sterling, 23 March to 29 June 2020
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the companies and managers and do not constitute financial advice.