Funds Struggle in Tough Month for Markets

October was a tough month because of events in the Middle East. There has been a lot said  about what has been going on, but for this article, we will focus on the markets and the impacts on fund returns.

Very few markets had positive returns last month, and as such, most funds were down. In our dataset of over 3,200 Morningstar-rated funds available to UK investors, only about 250 were in the black, and only 26 funds returned above 1%.

At the very top were funds investing in precious metals, but a significant portion of the 250 funds focus on corporate bonds. And at the other end, climate change, innovation and healthcare strategies saw double-digit losses.

Meanwhile, earnings season has provided some insight into company returns, and many companies reported better-than-expected profits. Despite this, many US tech companies in particular saw their share prices drop.

Ben Yearsley, director at Shore Financial Planning, says: “Markets are skittish – interestingly third quarter results from a raft of US and UK juggernauts such as Google owner Alphabet, and Visa have been good. Markets look decent value – bonds look good, gilts look good, equities look good (in pockets), even commercial property looks to have bottomed. Be patient in times of volatility.”

Best Performing Funds in October

Let’s start with the top 10. Among these, seven funds invest in precious metal equities, which profited from the gold price increase over the month, up $129 to finish at $1,994 an ounce. Gold, a safe haven asset, tends to rise in times of political volatility.

ES Baker Steel Gold & Precious Metals was the best performer. The fund is the smallest among the precious metal funds in the list, with about £16 million in assets, but for the past one year, it’s been in the top 17th percentile for returns. Over October, it gained 7.58%, but the fund is down 5.85% since January.

Gold-rated LF Ruffer Gold is the only one of the top funds in this category with a positive year-to-date return, at 4.25%. In October, it rose 5.49%. On the other hand, Jupiter Gold & Silver was one of the five worst performers in September, so an appearance among the best performers one month later must be a relief for its managers and investors.

Other categories feature too, though. JP Morgan’s Global Macro Opportunities is the largest fund in the list. It gained 3.31% over the month. One Africa equity fund features too (Alquity Africa, a strategy of £2.2 million), which returned 4.23%.

Bottom Performing Funds in October

Competition for being the worst performer in October was stronger. Some 19 funds had double-digit losses, and almost 500 had losses of 5% or more.

Last month we focused on the overall results in the third quarter of 2023 where we saw clean energy and climate transition strategies take big hits. This first month of Q4 shows a similar narrative, with many of the funds reappearing.

But, the categories at the bottom are more diverse than at the top. Alongside climate-related strategies there are healthcare funds, global small- and mid-cap equity strategies, US small-caps and biotechnology.

Two Gold-rated funds feature in the bottom 10 list: WS TB Guinness Sustainable Energy, down 11.23%, and the worst performer overall, GMO Climate Change Investment, was down 14.16%.

October also saw the return to the bottom 10 for another hotly discussed strategy: Nikko AM ARK Disruptive Innovation, a European version of Cathie Wood’s famous ARK Innovation ETF (which had a torrid 2022). The fund is advised by ARK Investment Management. Over the past month, it saw negative returns of 10.62%, however, the fund is up 13.17% in 2023 as it rides the AI wave – and is the only fund in the bottom 10 that isn’t down overall this year.


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