Which funds have outperformed in January?

Growth-Emerging-New-Plant-General-700x450.jpgAsian, emerging market equity and technology funds have dominated fund performance for the first month of the year, according to figures from the Investment Association.

January statistics showed the China/Greater China, Japanese Smaller Companies and Global Emerging Markets outperforming their western-based counterparts, with a respective 4.56 per cent, 2.37 per cent and 2.34 per cent return, on average.

According to Architas investment director Adrian Lowcock, having diversified exposure to such riskier areas of the market will serve investors well.

He says: “The bullish start to 2018 can be clearly seen in the makeup of the top-performing sectors as riskier areas of the market topped the performance tables with Chinese and Japanese equities leading the way.”

Further, technology-based funds are still attracting flows. With certain technology stocks indicating bubble threats, Architas believes impressive earnings growth is justifying the high share price rises.

Lowcock adds: “The sector has the second-best earnings growth forecasts in the S&P, behind the recovering energy sector.”

He also describes how China becoming a global leader in technology and innovation has helped drive markets higher still.

The Matthews Asia China fund – rising 9.82 per cent over the month – benefited from this trend with significant holdings in Alibaba and Tencent, he adds.
Pipping Matthews Asia to the post in January was top-performer MFS Meridian Latin American Equity fund, which returned 10.4 per cent.

Brazilian equities rose by more than 11 per cent over the month as the country’s appeal courts upheld the conviction of ex-President Luiz Inacio Lula da Silva, preventing him from running in this year’s general elections.

Lowcock says: “The strong performance of the Brazilian market in January alone highlights the volatile nature of emerging markets as well as the importance of having a diversified approach to the region – it is hard to predict which emerging market is likely to be the best performer over a month, a year or even longer.”

UK Index Linked Gilts was the worst-performing IA sector – falling 2.04 per cent, which Lowcock says is reflective of the headwinds facing the sector.

He says: “With a stronger global economy supporting it the UK continues to grow in spite of the uncertainty of Brexit and in contrast to many of the forecasts made in relation to Brexit.

“As such the outlook in the UK is that the Bank of England is increasingly likely to raise interest rates at some point in the future.

“Investors lost 2 per cent investing in government bonds and that is before taking into account inflation, which is currently running at 3 per cent.

“The poor performance of government bonds in January should act as reminder that the risks of investing in any asset class can change and is dependent on the circumstances at the time.”

Top Ten IA Sectors
IA Sector
Performance
         %
IA China/Greater China
4.56
IA Japanese Smaller Companies
2.37
IA Global Emerging Markets
2.34
IA Technology & Telecommunications
1.78
IA European Smaller Companies
1.68
IA Europe Excluding UK
1.62
IA Asia Pacific Including Japan
1.14
IA Asia Pacific Excluding Japan
1.13
IA Europe Including UK
0.93
Source:  FE Trustnet, 31st December 2017 to 31st January 2018. Total Return in Pounds Sterling.
Top Ten funds
Funds

Performance %
MFS Meridian Latin American Equity
10.4
Matthews Asia China
9.82
HSBC GIF Brazil Equity
8.96
Baring Latin America
8.72
NB China Equity
8.68
JPM Brazil Equity
8.49
Old Mutual China Equity
8.38
Fidelity China Focus
8.25
Aubrey Global Conviction
8.16
BlackRock GF Latin American
7.97
Source:  FE Trustnet, 31st December 2017 to 31st January 2018. Total Return in Pounds Sterling.
IA Sector
 
Performance
        %
IA UK Index Linked Gilts
-2.04
IA UK Gilts
-1.89
IA Global Bonds
-1.7
A Global Emerging Markets Bond
-1.66
IA Property
-1.65
IA North American Smaller Companies
-1.18
IA UK Equity Income
-1.04
IA UK Equity & Bond Income
-0.85
IA UK All Companies
-0.81
IA Sterling Corporate Bond
-0.45
Source:  FE Trustnet, 31st December 2017 to 31st January 2018. Total Return in Pounds Sterling.
Bottom Ten funds
Funds

Performance %
Fidelity Emerging Market Debt
-9.66
HC Charteris Gold & Precious Metals
-7.2
Old Mutual Gold And Silver
-6.54
Schroder Global Cities Real Estate Income
-6.53
L&G Global Real Estate Dividend Index
-5.93
Schroder Global Cities Real Estate Income
-5.81
Janus Henderson Flexible Income
-5.8
GS US Fixed Income Portfolio
-5.74
GS US Mortgage Backed Securities Portfolio
-5.73
Capital Group US Corporate Bond (LUX)
-5.65
Source:  FE Trustnet, 31st December 2017 to 31st January 2018. Total Return in Pounds Sterling.
 

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