US tech and small cap the winners while Woodford wilts: Willis Owen reveals the best & worst sectors and funds in first half of 2019
- US and Technology continue to lead in first half of 2019
- Omnis Income and growth (formerly managed by Woodford) and WEIF the worst performing equity funds
- Top ten performing funds are a mix of US, European and Russian equity portfolios
Adrian Lowcock, Head of Personal Investing, Willis Owen says:
“Markets got off to a strong start in 2019 as investors regrouped amid a shift from the US Fed to back away from further interest rate rises. The resolution to the US shutdown and hopes that the US and China could reach some agreement on trade also helped lift equities. The bull market was once again led by the US and, within that, technology stocks were once again key, having been the main driver in recent years.
“However, it has not been plain sailing, with the majority of the returns seen in the first few months of the year before hopes of a US-Chinese Trade deal were dashed by a Trump tweet, and before global economic date weakened.
“The top ten performing funds in the first half are usually characterised by one sector or asset class dominating the lists, and as one might expect, US and technology funds were dominant, but over the first six months of 2019 there are a number of interesting themes. Pictet Russia leads the pack as the country continues to make up ground from extremely low valuations, rebounding from the sell off last year. LF Ruffer Gold is a standout feature given the defensive nature of gold, but this reflects the rally in the gold price very recently and the subsequent move up in gold miners which we have seen in the second quarter of the year in particular.
10 best-performing sectors
| Investment Association Sector |
Percentage Return |
| North American Smaller Companies | 21.52 |
| Technology & Telecommunications | 20.04 |
| North America | 18.58 |
| Global | 16.78 |
| China/Greater China | 16.45 |
| Europe Including UK | 16.19 |
| Europe Smaller Companies | 15.86 |
| European excluding the UK | 15.10 |
| Global Equity Income | 14.13 |
| Asia Pacific Excluding Japan | 13.49 |
Source: FE Analytics, performance from 31st December 2018 to 30th June 2019 in pounds sterling on a total return basis
10 best-performing funds
| Funds |
Percentage Return |
| Pictet Russia Index | 32.15 |
| Brown Advisory US Smaller Companies | 31.31 |
| Brown Advisory US Mid-Cap Growth | 31.28 |
| Aubrey Global Conviction | 30.37 |
| LF Ruffer Gold | 29.42 |
| Threadneedle Pan European Focus | 29.41 |
| TM Cavendish AIM | 29.40 |
| Robeco Global FinTech Equities | 29.33 |
| Aberdeen Eastern European Equity | 29.29 |
| Legg Mason IF Martin Currie European Unconstrained | 29.24 |
Source: FE Analytics, performance from 31st December 2018 to 30th June 2019 in pounds sterling on a total return basis
“Moving to the other end of the spectrum, UK Direct property was the worst performing sector, once again seeing outflows as the first official Brexit deadline came and ultimately passed by. The top 10 worst performing sectors are dominated by the more defensive assets with the exception of Japanese Smaller Companies which still put in a positive return. It is worth noting, however, that even the worst performing sector delivered a positive return, with investors having initially been happy to take risk before becoming more risk averse in the second quarter.
“At a fund level, the worst-performing ten funds were dominated by targeted absolute return funds, although there are three equity funds, including two managed by the fallen star Neil Woodford, which make the list. The Omnis Income and Growth fund has now removed Woodford as manager, and the fund lagged the suspended LF Woodford Equity Income fund. The delay in Brexit is unlikely to help Woodford turn his performance around and the suspension of his flagship fund is likely to have been a distraction which could impact performance for the rest of the year.”
10 worst-performing sectors
| Investment Association Sector |
Percentage Return |
| UK Direct Property | 0.96 |
| Targeted Absolute Return | 2.72 |
| UK Gilts | 5.29 |
| Global Bonds | 6.12 |
| Mixed Investment 0-35% Shares | 6.14 |
| Sterling Strategic Bond | 6.27 |
| Sterling Corporate Bond | 6.32 |
| Japanese Smaller Companies | 7.05 |
| Sterling High Yield | 7.45 |
| Mixed Investment 20-60% Shares | 8.09 |
Source: FE Analytics, performance from 31st December 2018 to 30th June 2019 in pounds sterling on a total return basis
10 worst-performing funds
| Funds |
Percentage Return |
| VT Garraway Absolute Equity | -36.93 |
| Royal Bank of Scot Managed Defensive | -29.87 |
| The VT Oxeye Hedged Income Option | -24.78 |
| Royal Bank of Scot Managed Income | -18.34 |
| BMO Global Equity Market Neutral V10 | -16.74 |
| Royal Bank of Scot Global Bond | -16.60 |
| Omnis Income & Growth | -14.24 |
| LF Woodford Equity Income | -12.39 |
| Standard Life Strategic Investment Allocation | -11.67 |
| Standard Life Investments UK Equity Recovery | -11.50 |
Source: FE Analytics, performance from 31st December 2018 to 30th June 2019 in pounds sterling on a total return basis