September's top and bottom performing funds

A round up of the notable fund sector trends in September.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Rob Morgan

Equities recovered from August’s sell off in September, as optimism about trade war talks returned following some compromise on both sides. China said it would exempt 16 types of US goods from import tariffs ahead of talks. However, no big-ticket US goods, such as soybeans, were on the list. In response, Donald Trump will delay a planned tariff hike on $250bn of Chinese goods on 1 October as a "gesture of good will". The FTSE 100 rose by almost 3% over the month, excluding dividends, but is still showing gains of more than 10% in the year to date following the sharp rally in the first half of the year.

Despite this renewed optimism, the trade war has dampened global growth to its lowest level in a decade according to the Organization for Economic Cooperation and Development (OECD). It warned that the global economy risked entering a new, lasting low-growth phase if governments continued to dither over how to respond. The global economy will see its weakest growth since the financial crisis this year, slowing from 3.6% last year to 2.9% this year before a predicted 3.0% in 2020, the OECD said. Its previous estimate in May was for growth this year of 3.2% and 3.4% in 2020. Meanwhile, Chinese Premier Li Keqiang said it was "very difficult" for China's economy to grow at a rate of 6% or more because of the high base from which it was starting and the complicated international backdrop.

Given this environment, most central banks globally are now in an easing cycle, which generally means a supportive environment for equities. As expected, the US Federal Reserve cut interest rates by 25 basis points to the 1.75% to 2.00% range during the month. The committee was split on the decision, however, with two votes against the move. The Fed’s discussion showed disagreement about whether further cuts would be needed this year, which disappointed many investors and meant lacklustre performance for higher quality bonds and other interest-rate sensitive areas.

This trend extended to equity markets where relatively subdued performance masked a fairly dramatic switch in fortunes. Companies with more stable earnings that have been fashionable for the much of the year came under pressure, as did much of the technology sector. Meanwhile, those that are more sensitive to the ups and downs of the economy jumped higher after months of poorer performance. This effect partly explains the appearance of certain value-focused UK funds in the top ten performers.

Brexit developments, somewhat inevitably, had an effect on UK stocks too. EU Commission President Jean-Claude Juncker said that a Brexit deal could be reached by 31 October, but it remains unclear how any deal would be agreed in Parliament given the current division of views. An extension, and subsequent general election, looks like the most likely path for the time being. UK funds more exposed domestic areas as opposed to international earners generally fared best, as the likelihood of ‘no deal’ faded slightly. However, with the collapse of Thomas Cook, and profit warnings from FTSE 100 heavyweights Pearson, IAG, Carnival and Imperial Brands, the overall picture was far from upbeat.

Also among the better-performing areas was the energy sector as half of Saudi Arabia’s oil production was knocked out by a surprise military strike. In the immediate aftermath, the global oil supply dropped by roughly 5%, sending the price of Brent Crude soaring. While reserves will be used to plug the immediate production shortfall, and other OPEC members may be allowed to produce more, the episode highlights how energy infrastructure is vulnerable to sabotage.

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 September 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 September 2019: 31/08/2019 to 30/09/2019. 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.

More from author

  1. Rob Morgan

    How to invest in Artificial Intelligence

    Fund Research - 1st Oct 2019 12:33pm

    This powerful trend could shake up entire industries, but how can investors access it...

  2. Rob Morgan

    Woodford Investment Management to close

    Fund Research - 1st Oct 2019 12:33pm

    Manager has committed to work collaboratively in a transition period for Woodford Inc...

  3. Rob Morgan

    LF Woodford Equity Income Fund to close and distribute proceeds

    Fund Research - 1st Oct 2019 12:33pm

    Cash from assets sales is expected be paid to investors’ accounts in instalments from...

Most read articles

  1. September's top and bottom performing funds

    Woodford Investment Management to close

    Fund Research - 1st Oct 2019 12:33pm

    Manager has committed to work collaboratively in a transition period for Woodford Inc...

  2. September's top and bottom performing funds

    LF Woodford Equity Income Fund to close and distribute proceeds

    Fund Research - 1st Oct 2019 12:33pm

    Cash from assets sales is expected be paid to investors’ accounts in instalments from...

  3. September's top and bottom performing funds

    One way to invest sustainably

    Fund Research - 1st Oct 2019 12:33pm

    All investors, large and small, have a choice over where they put their money, and in...

Investment involves risk. You may get back less than invested.