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Funds feeling the heat in July falls

The average equity fund fell by 9.42 per cent in July, with Latin America suffering the most, dropping 14.92 per cent, according to the latest Lipper monthly fund report.

Only three of the 31 IMA unit trust and Oeic sectors produced positive returns last month and none was an equity sector. The index bear fund grew by 3.1 per cent, UK gilts were up by 0.23 per cent and money market was up by 0.18 per cent.

Among equity sectors, European smaller companies was the second-worst performer with a drop of 13.28 per cent. North American smaller companies fell by 12.54 per cent and UK smaller companies was down by 10.73 per cent.

Lipper says the best-performing individual fund was the Pall Mall high-yield Europe plus fund, which was up by 5.39 per cent, with Govett US bear fund placed second with a rise of 3.1 per cent.

The worst funds were both from Aberdeen, with its fund of investment trusts plummeting by 39.67 per cent during July and its progressive growth fund falling by 33.67 per cent.

Lipper head of research Brian Harvey says: “The last couple of months have not been particularly good for UK unit trusts, especially equity funds. Having had flat performances for most of the year, June and July saw equity funds drop on average by 9.64 per cent and then 9.42 per cent respectively. But such short-term downturns generally bounce back over the longer term so investors should remain wary of making decisions based on such investment periods.”

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