Coronavirus fears hit global markets in January

Posted by Adrian Lowcock in Press releases category on 03 Feb 20

UK Gilts offered investors a safe haven in January
Chinese, Asian and Japanese markets suffered on Corona Virus fears
Energy funds also hurt after oil price collapse

Adrian Lowcock, Head of Personal Investing, Willis Owen says:

“January started brightly for markets, with China and the US agreeing the first phase of a trade deal, and the outlook for global growth improving.

“However, the month was subsequently consumed by geopolitical events that were difficult for markets to predict and react to, with volatility jumping in response. Days into the New Year the US’ assassination of Iranian General Soleimani led to increased tensions in the Middle East, with safe haven assets such as gold and government bonds rallying in response and shares wobbling.

“The emergence of the Coronavirus in China and its subsequent spread across the globe has since impacted on markets. Although the response was initially minor and only escalated in the final days of January it has caused major sell-offs for shares and a wholehearted switch to defensive assets such as UK Index Linked gilts.

“However, whilst defensive sectors were the best performers, only the ASI Sterling Long Dated Government Bond fund flew the flag for fixed income by getting into the top ten funds of January.

“Instead, individual funds were dominated by those with a technology focus amid another bumper round of results from the US tech giants at the end of the month. In particular, Baillie Gifford American delivered 10.3%, supported by strong numbers from long-term favourite Tesla.”

10 best-performing sectors

Investment Association Sector	Percentage Return
UK Index Linked Gilts	5.23
Technology & Telecommunications	4.72
UK Gilts	4.04
Sterling Corporate Bond	2.36
North America	2.06
Global EM Bonds – Hard Currency	1.99
Property Other	1.82
North American Smaller Companies	1.47
Sterling Strategic Bond	1.38
Global Bonds	1.08

Source: FE Analytics, performance from 31st October to 30th November 2019 in pounds sterling on a total return basis

10 best-performing funds

Funds	Percentage Return
PUTM International Growth	27.85
Baillie Gifford American	10.32
Liontrust Global Technology	8.91
Morgan Stanley US Growth	8.75
LF Miton US Smaller Companies	8.47
Smith & Williamson Artificial Intelligence	7.80
Morgan Stanley US Advantage	7.73
MFM Technology	7.70
ASI Sterling Long Dated Government Bond	7.17
Lord Abbett U.S. Growth Leaders	7.00

Source: FE Analytics, performance from 31st October to 30th November 2019 in pounds sterling on a total return basis

“Perhaps it is not surprising that as investors grew more confident and optimistic with regards to the outlook for the global economy, bonds had a tough month with global emerging maket bonds leading UK index linked bonds. In fact Global Emerging Markets was the only equity sector to feature in the bottom ten.

“November saw further profit taking in gold funds as investors rotated back into risk assets. MFM Junior Gold once again featured at the top of the of the worst performers list along with LF Ruffer Gold. Latin American funds dominated the worst performers list. The Brazilian Real had a tough month. Disappointment in the progress being made by the Brazilian President Jar Bolsanaro hit the currency harder than the stockmarket but falls in both impacted returns from a Sterling investor perspective.

10 worst-performing sectors

Investment Association Sector	Percentage Return
Japanese Smaller Companies	-4.12
China/Greater China	-3.60
Asia Pacific Excluding Japan	-3.12
Global Emerging Markets	-2.95
UK Equity Income	-2.54
Asia Pacific Including Japan	-2.50
UK All Companies	-2.34
Japan	-2.19
European Smaller Companies	-1.77
UK Equity & Bond Income	-1.58

Source: FE Analytics, performance from 31st December 2019 to 31st January 2020 in pounds sterling on a total return basis

10 worst-performing funds

Funds	Percentage Return
LF Equity Income	-75.30
Schroder ISF Global Energy	-11.53
Franklin European Opportunities	-10.64
ASI UK Recovery Equity	-9.11
TB Guinness Global Energy	-9.05
Fidelity China Focus	-8.77
JPM Korea Equity	-8.42
NB China Equity	-8.42
HSBC GIF Brazil Equity	-8.32
Guinness Global Energy	-8.18

Source: FE Analytics, performance from 31st December 2019 to 31st January 2020 in pounds sterling on a total return basis

Important Information: We do not give investment advice, so you will need to decide if an investment is suitable for you. If you are unsure whether to invest, you should contact a financial adviser.

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Past performance of an investment is not a guide to future performance, the value of investments or income from them may go down as well as up and you may get back less than you originally invested. Tax treatment depends on your individual circumstances and may change.

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