The top sector of 2024 might be one you’ve never heard of

As the year draws to a close, and before fear and panic sets in as we realise how much there is left to do before the big day, we take a moment to reflect on the year gone by, highlighting the financial winners and losers of 2024.

This year has been dominated by elections around the world, with the geopolitical landscape continuing to look uncertain with elections now in Germany, which could see the far right in government. Although major global economies appear to be in better shape, fears of reviving inflationary pressures remain, while government debt levels give cause for concern. In a turbulent world, it hasn’t been a bed of roses for financial markets.

So which areas of the market have benefitted from this environment, and which have suffered?

Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.

Best-performing sectors

After topping the charts in 2023, Technology and Technology Innovation was overtaken by the niche specialist sector Financial and Financial Innovation for the best-performing sector of 2024, with the average fund returning 27.4%*.

Up from eighth place last year, the sector, as you would expect, is heavily influenced by economic activity. As long as a recession is avoided next year, then funds in this sector could continue to perform well as a stable or growing economy also boosts investor confidence, leading to increased investments in financial services, banking and insurance.

In a world increasingly dictated by growth stocks — between the buzz around AI and the continued fascination with the Magnificent Seven and technology — financials provide a unique opportunity for investors to incorporate value into their portfolio without compromising on performance.

North America, India/Indian Subcontinent and North American Smaller Companies round out the top five best-performing areas behind Financials and Technology.

Best-performing funds

The best-performing fund on the Chelsea Selection in 2024 has been Baillie Gifford American, which has returned 36.2%**. A pure US equity growth fund, the team focuses on a small number of companies to create exceptional returns. This is a high-conviction fund with the top ten holdings representing 54% of the fund, including popular names in Amazon, Nvidia, Netflix and Tesla***.

In second and third place are Sanlam Global Artificial Intelligence and Polar Capital Global Insurance, with the latter sitting in the Financial and Financial Innovation sector.

Top 10 performing funds from the Chelsea Selection in 2024

*Source: FE fundinfo, at 13 December 2024
**Source: FE Analytics, total returns in pounds sterling, 1 January 2024 to 12 December 2024
***Source: fund factsheet, 31 October 2024

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 author and fund managers and do not constitute financial advice.