Best and worst performing funds and sectors in October

Japan and Asia led global emerging markets higher while technology takes the top performing sector spot. Adrian Lowcock, investment director at Architas, looks at the best and worst performing funds and sectors in October.

Best and worst performing funds and sectors in October

Japan led global equity markets higher in October as Shinzo Abe won another term in office following a surprise election. Japanese shares have also been boosted by strong corporate earnings growth which has outstripped other developed economies.

Asia and emerging markets also performed well as China was in focus as the Communist Party concluded their committee meeting of the leadership, or Plenum, which is held every five years. This is a major event as it sets out China’s plans and vision for the next five years and beyond.

The best performing funds were Asian led by Matthews Asia Ex Japan, while the Jupiter India fund also featured as the best performing country specific fund.

Stocks

Technology stocks took the top spot. Whilst valuations are high in the sector, investors are still willing to pay for the huge growth potential offered by technology companies. The sector has the second best earnings growth forecasts in the S&P, behind the recovering energy sector.

Within technology the Legal & General Technology Index trust outperformed actively managed funds. Active managers may struggle to outperform the index as it is hard to justify owning some of the technology companies due to the high valuations and identifying the next winners in a rapidly evolving sector has always been a challenge.

Top Ten IA Sectors

Sector Performance
%
IA Technology & Telecommunications TR 6.11
IA Japan TR 5.98
IA Asia Pacific Including Japan TR 5.74
IA Asia Pacific Excluding Japan TR 5.12
IA China/Greater China TR 5.12
IA Japanese Smaller Companies TR 4.85
IA Global Emerging Markets TR 4.05
IA North America TR 3.56
IA UK Smaller Companies TR 3.46
IA Global TR 3.3

Source:  FE Trustnet, 30th September to 31st October 2017. Total Return in Pounds Sterling.

Top Ten funds

Fund Performance
%
Matthews Asia ex Japan Dividend 9.79
GAM Star Emerging Equity 9.51
L&G Global Technology Index Trust 9.37
Baring Global Mining TR 9.18
Old Mutual Pacific Equity 8.82
Jupiter India 8.49
JGF-Jupiter India Select 8.38
Neptune Global Technology 8.23
Old Mutual Asian Equity Income 8.17
Baring Korea Trust 8.12

Source:  FE Trustnet, 30th September to 31st October 2017. Total Return in Pounds Sterling

Bottom 10 IA sectors

Bonds continued to suffer as the trend shifted to rising interest rates. In October the European Central Bank announced it would reduce its level of Quantitative Easing (QE), although it extended the deadline for ending it completely.

Better than expected UK growth in the 3rd quarter strengthened the argument for an interest rate rise here whilst the US continues down the road of reversing QE and raising interest rates. All bad news for bond sectors which barely managed a positive return in October.

However, gold and biotech funds were the main losers in October. Gold understandably so as the defensive asset class fell out favour as investors became more willing to take risk.  Biotech has suffered as M&A activity has waned and valuations have eased back. Investors lost interest and have shifted their focus to other niche markets – artificial intelligence, robotics and niche technology funds.

Sector Performance
%
IA Sterling High Yield TR 0.7
IA Global Bonds TR 0.66
IA Targeted Absolute Return 0.66
IA UK Index Linked Gilts TR 0.56
IA Sterling Corporate Bond TR 0.54
IA Sterling Strategic Bond TR 0.53
IA UK Gilts TR 0.37
IA Global Emerging Markets Bond TR 0.07
IA Money Market TR 0.01
IA Short Term Money Market TR -0.01

Source:  FE Trustnet, 30th September to 31st October 2017. Total Return in Pounds Sterling

Bottom Ten funds

Fund Performance
%
MFS Meridian Emerging Markets Debt Local Currency -3.98
GAM Multistock Health Innovation Equity -3.99
GAM Multibond- Emerging Markets Inflation Linked Bond -4.05
Smith & Williamson Global Gold & Resources -4.34
Pictet Biotech -4.42
Candriam Equities L Biotechnology -4.53
Templeton Frontier Markets TR -4.68
HC Charteris Gold & Precious Metals -5.6
SF Peterhouse Smaller Companies Gold -5.77
MFM Junior Gold -6.5

Source:  FE Trustnet, 30th September to 31st October 2017. Total Return in Pounds Sterling

 

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest and tax policies may change.

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