Willis Owen shares the best and worst-performing sectors and funds in 2018

Posted by Adrian Lowcock in Press releases category on 10 Dec 18

  • Technology stocks drive markets in 2018
  • Half of the worst performing funds are gold funds
  • European smaller companies tops the list as worst performing sector.
Adrian Lowcock, Head of Personal Investing, Willis Owen says:

“It won’t come as much surprise to that Technology held onto to the top spot for being the best performer in 2018, although it lost some of its shine in the second half of the year.  The performance of the sector has also been the main driver for the US market with both large and smaller companies delivering positive returns for 2018. The US also benefited from a significant boost in corporate earnings as President Trump’s tax reforms worked through the system and boosted the US dollar to benefit UK based investors.  The tech bias was also reflected in the top performing funds led by Baillie Gifford American, closely followed by GAM Star Alpha Technology. The top 10 performing funds for 2018 were either US, technology or had a healthcare bias with the one exception of JPM Emerging Middle East Equity.

In a year where volatility returned in force, British investors have once again benefited from having overseas exposure as the pound remained vulnerable due to Brexit uncertainty. Riskier areas disappointed in 2018 with defensive sectors such as UK gilts, global bonds, and property offering investors some protection from the volatility in the stock markets in the later half. The diversifying benefits of property have shone  through yet again in 2018, although it was hardly a stellar year for investors.

The top 10 best-performing sectors

Investment Association Sector Percentage Return
 Technology & Telecommunications  6.02
 North America 4.75 
 UK Direct Property 4.33 
 UK Index Linked Gilts 2.77 
 North American Smaller Companies 2.60 
 Property Other 1.78 
 IA UK Gilts 1.20 
 Global Bonds 0.8 
 IA Global -1.65 
 Sterling Corporate Bond -2.12 
Source: FE Analytics, performance from 31st December 2017 to 10th December 2018 in pounds sterling on a total return basis

10 best-performing funds

Funds Percentage Return
 Baillie Gifford American  22.07
 GAM Star Alpha Technology 21.53 
 Polar Capital Healthcare Opportunities 19.98 
 Morgan Stanley US Growth 19.22 
 Neptune Global Technology 17.91 
 Brown Advisory US Sustainable Growth 17.78 
 Seilern Stryx America 15.74 
 Fidelity Global Health Care 15.46 
 JPM Emerging Middle East Equity 15.03 
 T. Rowe Price US Large Cap Growth Equity 14.74 
Source: FE Analytics, performance from 31st December 2017 to 10th December 2018 in pounds sterling on a total return basis

“On the downside, the worst performing sectors have been dominated by Emerging Markets and Asia led by China.  A slowdown in growth as stimulus programs came to an end combined with the US-Chinese trade war impacting on both the outlook for China and the wider Asia region which got caught up in the cross fire. The pause in raising tariffs has helped China recover, having been the worst performing sector for the first 11 months of the year. The UK unsurprisingly has been a weak performer in 2018 as Brexit uncertainty meant all investors avoided the region waiting for more clarity before deciding to invest – especially given there are less risky options available.  Europe disappointed investors this year as growth slowed and political risk, which is never far away, returned to dominate headlines in 2018. However it may still come as a surprise to investors the European smaller companies topped the worst performing sector as concerns over the slowdown in growth and political uncertainty weighed on the region.

Gold funds dominate the worst performing list with TC South River Gold and Precious Metals topping the list. When the US dollar is strong as it has been this year then the gold price tends to fall to keep the price flat for investors using other currencies. In addition whilst gold is a good defensive asset for volatile markets it tends not to react much differently in the short term and only really protects over the medium term.

10 worst-performing sectors

Investment Association Sector Percentage Return
 European Smaller Companies -13.33 
 China/Greater China  -11.45
 Global Emerging Markets  -11.03
 UK Smaller Companies -10.68 
 UK All Companies  -10.24
 Europe Excluding UK  -9.83
 UK Equity Income  -9.58
 Europe Including UK  -9.07
 Asia Pacific Excluding Japan  -9.01
 Asia Pacific Including Japan  -6.86
Source: FE Analytics, performance from 31st December 2017 to 10th December 2018 in pounds sterling on a total return basis

10 worst-performing funds

Funds Percentage Return
 TC South River Gold and Precious Metals -27.93
 Quilter Investors UK Equity Income II -27.25 
 Jupiter India -26.74
 JGF-Jupiter India Select -25.54 
 Comgest Growth Gem Promising Companies -24.75
 L&G UK Alpha Trust -23.28 
 Quilter Investors Equity 1 -22.85
 MFM Junior Gold -22.67
 Majedie UK Smaller Companies -22.46
 Merian Europe (Ex UK) Smaller Companies -22.26
Source: FE Analytics, performance from 31st December 2017 to 10th December 2018 in pounds sterling on a total return basis

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