November’s top and bottom performing funds

A round up of the notable market and fund sector trends in November as global stock markets rallied in response to positive vaccine news.

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  1. Rob Morgan

Global equities had their best month since 1975 in November, boosted by positive announcements on the development of Covid-19 vaccines, as well as hopes that Joe Biden’s new administration will unleash more economic stimulus next year. 

Market sentiment was so upbeat on hopes of a vaccine-driven economic recovery that the Dow Jones industrial average, S&P 500 and the US small cap Russell 2000 all hit new record highs – as did the MSCI world equity index, which tracks shares listed in 23 countries.

There were some huge moves in the most depressed sectors such as energy and banks, as well as the areas most acutely affected by Covid-19 lockdowns such as retail and leisure. The uplift gave long-suffering value investors fresh hope of a 'great rotation' in their favour as more expensive areas of the market stalled, including e-commerce businesses and other stocks deemed to benefit from a ‘lockdown’ world. Hopes of a speedier return to normal life and better economic growth also lifted the oil price by over 20% over the month and propelled some energy stocks up by 50% or more.

The UK stock market was a chief beneficiary of the vaccine breakthroughs, given its exposure to energy and other areas reliant on economic health such as banks. Meanwhile, many smaller, domestically focused stocks turbo charged returns from smaller and mid-sized company funds. In other markets too it was smaller companies and more economically sensitive areas that led the way as investors hastily reappraised economic growth rates for 2021 and beyond. Vaccines won’t be able to combat ongoing ‘second waves’ of the virus, but the probability of further peaks is now much reduced, leading to expectations of a spectacular economic rebound in the first half of 2021 and, perhaps, higher inflation.

In the short-term, though, economic news is likely to worsen. The most recent government forecast is for the UK economy to shrink by 11% over the course of 2020 and many more businesses could run into trouble from the continued restrictions on normal life. The situation is repeated, to a greater or lesser degree, across Europe and the US, with Asia, notably China, facing less restrictions and more robust activity heading towards the year end.

UK equity income and a selection of recovery and value-orientated funds dominated the list of top performers over the month, alongside energy specialists. Whether UK equities can continue their strong run now appears to hinge on down-to-the-wire Brexit negotiations. No concrete signs of a deal have emerged thus far.

A sell off in gold, a strong performer for much of the year, accelerated over the month as investors shunned safe-haven assets in favour of areas expected to benefit most from an economic revival. High quality bonds also dipped, and index linked gilts suffered a decline as the UK government announced a change to the measure of inflation used in the calculation of interest. The retail prices index (RPI) will replace the consumer prices plus housing (CPIH) index from 2030, which is expected to result in a lower return for inflation-linked UK government debt. However, the fall in prices was relatively small because some investors worried the change might take effect from an earlier date.

Although investors should be aware past performance is not a reliable indicator of future results, here are the top and bottom ten Investment Association (IA) funds and sectors* for November 2020 in full:

Top 10 funds:

Bottom 10 funds:

Top 10 sectors:

Bottom 10 sectors:

Past performance is not a reliable indicator of future returns. Figures are shown on a % total return basis, bid to bid price with net income reinvested; Source: FE Analytics, data for November 2020: 31/10/2020 to 30/11/2020. Onshore and retail open-ended funds only.

*There are around 3,000 funds on sale in the UK. The Investment Association divides these into nearly 40 ‘sectors’, broad groupings that help investors and advisers compare funds of similar types before looking in detail at individual funds.

Past performance is not a reliable guide to future returns. This website is not personal advice based on your circumstances. No news or research item is a personal recommendation to deal. Investment decisions in fund and other collective investments should only be made after reading the Key Investor Information Document or Key Information Document, Supplementary Information Document and Prospectus. If you are unsure of the suitability of your investment please seek professional advice.

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