October’s top and bottom performing funds

A round up of the prominent fund sector trends in October, a tricky month for investors.

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  1. Rob Morgan

Politics continued to exert influence on markets during October, and for UK investors this was most evident in currency moves. The pound had its best month in a decade, appreciating by around 5% against the US dollar, and a little less against the Euro, as the likelihood of an imminent ‘no deal’ Brexit, widely considered a more disruptive outcome, faded from view. The further delay to the UK’s withdrawal from the EU, and now a December general election, provides little certainty for investors and the pound could well remain volatile.

For the month of October at least, funds invested in overseas assets were on the wrong side of currency moves, and the worst-performing sectors were those targeting US equities or those containing significant exposure to the region such as technology and global equities.

The FTSE 100 was also affected by the pound’s rally, with the UK market falling by about 1% during the month, excluding dividends. The majority of earnings generated by the blue-chip index’s constituents are in foreign currency and are therefore impacted by sterling strength. However, the index is still showing gains of almost 9% in the year-to-date following the sharp rally in the first half of the year. UK smaller companies enjoyed better returns, buoyed slightly by the Brexit developments.

Many ‘value’ orientated funds had the edge as growth-orientated areas and other success stories of the year generally faded slightly. Market concerns primarily revolved around the trade relations between the US and China. Negotiators are working to complete a text for Donald Trump and Chinese President Xi Jinping that is hoped will be signed sometime in November. It is expected to cover Chinese purchases of US agricultural goods, intellectual property protections, currency practices and increased access for US companies to China’s financial services market. However, it will only be an interim deal that will not resolve some of the more contentious issues, so is only expected to result in a pause in the tariff escalation rather than an end to them.

Among the worst-performing areas were gilts and gold. Both have been considerable beneficiaries of low expectations for global interest rates and inflation, and although the US Federal Reserve recently cut interest rates by a quarter of a point, the third cut in four months, Federal Reserve Chair Jerome Powell hinted the bank would hold off on further cuts, thus dampening investor’s enthusiasm for assets that thrive in a low rate environment. According to Mr Powell, the US economy remains resilient with robust consumer spending and, more contentiously, increasing certainty on trade.

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 October 2019 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 October 2019: 30/09/2019 to 31/10/2019. Onshore and retail open-ended funds only.

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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