Markets continued to rise in May as investors focused on exiting lockdown: Willis Owen reveals the best and worst sectors and funds in May 2020
- UK Direct Property the worst performing sectors for second month in a row
- Gold and Technology focused funds continue to shine in May
- Small Cap and Emerging Market debt dominate best performing sector as investors add risk
Adrian Lowcock, Head of Personal Investing, Willis Owen says:
“Stock markets have continued to look beyond the economic data and rallied further in May as investors’ attention switched to exiting the lockdown.
“Smaller companies continue to lead the rebound, having been the sectors which led markets lower during the March crash. This time round the Japanese market led global equity markets higher.
“The region hasn’t suffered as much by the spread of Coronavirus, but as a global exporter has a lot to gain from countries reopening their economies.
“Technology companies continue to perform, having been huge beneficiaries of the lockdown as companies and people turn to digital services to carry on working and living their lives. As a result, technology companies held up well during the crash and continued to perform during the continued recovery in May.
“Emerging Market Debt also featured in the top ten performing sectors as investors were willing to take on more risks and the asset class looks attractive with income becoming even scarcer.
“Japanese funds were in the top ten performing, with Small Cap fund Legg Mason Japan Equity the fifth best performer for the month. The fund has a reputation for being volatile but has been a strong performer in recent years.
“Whilst Investors seemed willing to add risk in May, gold continues to stay in the spotlight and MFM Junior Gold fund was the top performing fund for the month. Gold miners give leveraged exposure to the gold price and smaller gold mining companies add an element of speculation – they tend to do well when the gold price is expected to rise.
“Gold has been the big winner from the move by central banks to expand balance sheets to support economies, companies and individuals. The precious metal continues to attract support amongst investors even as confidence returns to markets.”
10 best-performing sectors
|
Investment Association Sector |
Percentage |
|
Japanese Smaller Companies |
12.1 |
|
European Smaller Companies |
9.94 |
|
Japan |
8.68 |
|
Global EM Bonds – Hard Currency |
8.62 |
|
Global EM Bonds – Blended |
8.36 |
|
Technology & Telecommunications |
8.11 |
|
Europe Excluding UK |
8.02 |
|
North American Smaller Companies |
7.66 |
|
Global EM Bonds – Local Currency |
7.55 |
|
Europe Including UK |
7.4 |
Source: FE Analytics, performance from 30th April to 31st May 2020 in pounds sterling on a total return basis
10 best-performing funds
|
Funds |
Percentage |
|
MFM Junior Gold |
25.71 |
|
Fidelity Emerging Market Debt |
17.93 |
|
Morgan Stanley US Growth |
17.91 |
|
New Capital US Future Leaders |
15.77 |
|
Morgan Stanley US Advantage |
15.48 |
|
Legg Mason IF Japan Equity |
15.4 |
|
Wellington FinTech |
15.3 |
|
BNY Mellon Japan Small Cap Equity Focus |
15.11 |
|
LF Miton UK Smaller Companies |
15.08 |
|
RWC Nissay Japan Focus |
14.76 |
Source: FE Analytics, performance from 30th April to 31st May 2020 in pounds sterling on a total return basis
Lowcock adds: “For the second month in a row the UK Direct Property sector was the only sector to post negative returns. The bulk of the sector remains suspended as it continues to struggle to value accurately the underlying properties in the funds. It is still going to be some time before we find out what the full extent of the impact the crisis will have had on property funds.
“UK Equity income had a weak month as dividend cuts continue to weigh on the asset class. The UK has long been known for its income culture and the shock caused by coronavirus led to many companies slashing their dividends. Whilst we expect more to come, the worst is probably over, as British companies acted fast to cut dividends. Chinese equities also posted a modest return as President Trump reopened hostilities with the country at the end of the month.
“The worst performing funds for the month were a mixture of absolute return funds, income funds and emerging markets funds. The VT Oxeye Hedged Income Option tops the list for the second month in a row and having lost 6% in April it shed a further 13% in May. Whereas, Argonaut Absolute Return gave up some of the gains it had made during the March sell off.”
10 worst-performing sectors
|
Investment Association Sector |
Percentage |
|
UK Direct Property |
-0.61 |
|
UK Gilts |
0.21 |
|
China/Greater China |
0.97 |
|
Sterling Corporate Bond |
1.09 |
|
UK Equity & Bond Income |
1.17 |
|
Targeted Absolute Return |
1.25 |
|
Asia Pacific Excluding Japan |
1.38 |
|
UK Equity Income |
1.38 |
|
Mixed Investment 0% – 35% Shares |
2.11 |
|
Sterling Strategic Bond |
2.19 |
Source: FE Analytics, performance from 30th April to 31st May 2020 in pounds sterling on a total return basis
10 worst-performing funds
|
Funds |
Percentage |
|
The VT Oxeye Hedged Income Option |
-13.08 |
|
BlackRock Emerging Markets Absolute Alpha |
-6.57 |
|
SJP Alternative Assets |
-5 |
|
Premier Optimum Income |
-4.28 |
|
Premier Monthly Income |
-4.07 |
|
Fidelity China Focus |
-3.47 |
|
Alquity Indian Subcontinent |
-3.38 |
|
TM Mitcham |
-3.37 |
|
Argonaut FP Argonaut Absolute Return |
-3.29 |
|
Pictet Indian Equities |
-3.24 |
Source: FE Analytics, performance from 30th April to 31st May 2020 in pounds sterling on a total return basis
-Ends-
Enquiries
Adrian Lowcock, Chris Tuite
Head of personal investing Director & Head of Consumer Finance
Willis Owen MRM London
07849 846387 020 3326 9925
Adrian.lowcock@willisowen.co.uk 07471350180
Willisowen@mrm-london.con
Notes to Editors
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