It's not just the Gold Cup that is shining this St Leger's Day

While this summer feels like it has been a turbulent one, asset classes around the world have held up remarkably well. So much so that investors following the St Leger's day adage, who sold their investments in May, would have missed out on positive returns almost across the board.

The St Leger's Day adage refers to the time when stock market traders either spent the summer on holiday, or attending social or sporting events like Wimbledon and Ascot. As a result of less trading, any sudden market sell-offs were amplified. Therefore, it was suggested, investors were better off selling their holdings in May and investing again on St Leger's Day in September.

The St Leger – which will be held this Saturday 14 September 2019 - is the oldest of Britain's five horse-racing Classics and is the last of the five to be run each year – marking the end of the summer sporting social calendar and a return to work for those newly-tanned traders.

Is there any truth in the adage?

The weather, politics and stock markets have all had their good and bad days this summer, but overall, our investments at least have come out on top.

Of the 22 sectors in the Investment Association universe, 18 are in positive territory between 1 May and 9 September 2019. The best performing sector was IA Global Emerging Markets Bond, which was up some 9.1%*, followed by IA UK Gilts (8.2%*) and IA UK Index Linked Gilts (7.5%*).

The four sectors that posted negative returns were IA UK Smaller Companies (-3.3%*), IA UK Equity Income (-2.33%*), IA UK All Companies (-1.1%*) and IA UK Direct Property (-0.2%*).

While 2019 has disappointed for UK equities, looking back over the past 30 years or so, the UK stock market (as measured by the FTSE All Share Index) has produced positive returns in the majority of cases (20 out of 32 years)**.

And good active managers can still beat the odds: the best performing UK equity funds was Lindsell Train UK Equity, which is on the Chelsea Core Selection. It returned 8.5%*. Second was Royal London Sustainable Leaders (8.2%*) and third was another Core Selection favourite, TB Evenlode Income, which was up 7%*.

Gold shines brightly

What the overall data does not highlight is the strength of gold assets over the summer months – as many sit in the very diverse 'IA Specialist' sector. 

However, analysing individual fund performance over the period shows clearly that gold funds have shone: nine of the top ten funds invest in gold. The best performer was LF Ruffer Gold, which returned 56.1%*. It was closely followed by HC Charteris Gold & Precious metals (49.95*) and Investec Global Gold (49.2%*).   

Darius McDermott, managing director of Chelsea commented: “Gold is often seen as being a 'safe-haven' at times of trouble, but it is important investors remember that it too can be a volatile asset class. What it does do very well, however, is act as a hedge against a slowing global economy, central bank mistakes and extreme market conditions. 

“Within the VT Chelsea Managed funds, we have around a 4% weighting to the asset class***, which has served them very well over the summer months.”

*Source: FE Analytics, total returns in sterling, 1 May 2019 to 9 September 2019

**Source: Fidelity and FE Analytics, total returns in sterling. 

***Source: Chelsea Financial Services, weighting as at 31 August 2019.

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 individuals and do not constitute financial advice nor are they a recommendation to buy or sell.


Published on 11/09/2019