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Willis Owen reveals the best & worst sectors and funds in March 2020.

Posted by Adrian Lowcock in Press releases category on 01 Apr 20

  • UK Gilts only asset class to deliver positive returns in March
  • UK markets worst performers
  • Energy funds see 40%+ falls due to double whammy of the oil price war and coronavirus
Adrian Lowcock, Head of Personal Investing, Willis Owen says:

“March was a month to forget for most investors, with some of the worst falls seen for more than a decade. The speed of the coronavirus-induced sell-off caught investors by surprise, reversing hopes that the virus would be contained in China and sending stock markets around the world into freefall.

“In troubled times investors flock to safety, and the best performing sectors were those that investors see as defensive. UK government gilts offered the only positive returns of all the IA sectors, as bond yields tumbled in anticipation of huge government support, and amid a desire to liquidate everything with any risk attached to it.

“However, while gilts managed to eke out a return, every other asset class succumbed to selling pressure. Inflation-linked gilt yields fell as in the short term the fall in the oil price and collapse in economic activity is disinflationary. Japanese equity funds held up well as the currency has long been a safe haven, so whilst the country’s equity market fell the currency rallied versus sterling, providing a lift to returns.

“Property featured in the best performing sectors, but given that many funds have been suspended in March because the independent valuers could no longer accurately value the properties, the performance figures are unlikely to be accurate and should effectively be ignored. Indeed, when they reopen the sector will likely face a double blow from investors who were locked in redeeming, and from tumbling property values. 

“Meanwhile, at a fund level, the Argonaut Absolute Return fund delivered the strongest performance of all the funds in the IA universe thanks to its short positions in financials and industrials.. Absolute Return funds have done a better job of protecting capital so far in this crisis, with the wider sector only down 4.9% in March.  Lindsell Train Japanese Equity is also a standout fund as it has already been a strong performer before the crisis. The fund’s quality focus and bias to pharmaceuticals and technology helped it deliver strong returns in March.

10 best-performing sectors

Investment Association Sector Percentage Return
UK Gilts 1.63
UK Direct Property -1.71
Index Linked Gilts -2.81
Japanese Smaller Companies -2.89
Japan -3.43
Global Bonds -3.62
Targeted Absolute Return -4.91
China/Greater China -5.09
Technology & Telecommunications -5.39
Sterling Corporate Bond -6.44
Source: FE Analytics, performance from 29th February 2020 to 31st March in pounds sterling on a total return basis

10 best-performing funds

Funds Percentage Return
Argonaut Absolute Return 15.0
VT LAMBDA Investment 11.23
Lindsell Train Japanese Equity 10.5
ASI Strategic Investment Allocation 9.11
Aviva Inv Asia Pacific Property 8.89
Thesis PM 8.58
Winton Trend (UCITS) 8.49
Ruffer LLP Charity Assets Trust 8.18
Allianz Strategic Bond 7.94
Threadneedle Aquila Life Overseas 6.69
Source: FE Analytics, performance from 29th February 2020 to 31st March in pounds sterling on a total return basis

“On the downside, the spread of the coronavirus caused chaos in global equity markets. UK investors found the domestic UK markets suffered some of the worst falls in sterling terms, particularly against safe haven currencies such as the US dollar and Japanese Yen. The worst-performing sectors were the three UK equity sectors, Europe and US smaller companies, reflecting the regions worst hit by the crisis in March.  Smaller companies in particular are a focal point for pain at present as they are likely to find it harder to survive the shutdown and subsequent collapse in economic activity.

“However, it was the energy funds which topped the worst performing funds list as they faced the double whammy of an oil price war between Russia and Saudi Arabia, along with the expected drop in oil demand. Schroder ISF Global Energy saw the sharpest decline – near halving in value in just a month - with. MFM Junior Oils Trust not far behind following the collapse of the oil price to a 17-year low. 

“Outside of energy-focused funds, emerging markets saw significant losses as investors jettisoned anything risky from their portfolios.”

10 worst-performing sectors

Investment Association Sector Percentage Return
UK Smaller Companies -22.56
UK All Companies -18.51
UK Equity Income -18.42
European Smaller Companies -17.22
North American Smaller Companies -16.72
Property Other -16.22
Global Emerging Markets -15.46
Sterling High Yield -14.43
UK Equity & Bond Income -14.36
Global EM Bonds Hard Currency -14.14
Source: FE Analytics, performance from 29th February 2020 to 31st March in pounds sterling on a total return basis

10 worst-performing funds

Funds Percentage Return
Schroder ISF Global Energy  -44.64
MFM Junior Oils Trust -37.8
Aptus Global Financials -37.56
ASI UK Recovery Equity -37.22
VT Cape Wrath Focus -35.98
Janus Henderson Latin American -35.89
Liontrust Latin America -35.48
Elite Webb Capital Smaller Companies Income & Growth -35.15
GS North America Energy & Energy Infrastructure Equity Portfolio -35.13
HSBC GIF Brazil Equity -35.07
Source: FE Analytics, performance from 29th February 2020 to 31st March in pounds sterling on a total return basis