In this year’s market turnaround, who’s done the best?
As the curtains closed on the first half of the year, markets across the world were in a jubilant mood.
Trade war fears reduced following the agreement of the cease fire between China and the US at the G20 summit, while the change in stance from the Federal Reserve, which went from looking like it would raise interest rates at the start of the year to now looking more likely to cut, has also been warmly received by investors.
All this has helped to push various global stockmarkets up to their highest since September 2018 – quite a change in sentiment since the start of the year. In this year’s market turnaround, who’s done the best?
Of the world’s major market indices, the best performing since the start of the year has been the Russian Trading System, with a total return of 29.9%.
According to Russ Mould, investment director at AJ Bell, this is reflective of pressure on Russian companies to be more generous to shareholders. He notes: “For example, energy firm Gazprom hiked its dividend twice in a week, sending its share price soaring.”
At the same time, Russian assets have benefited from a spike in oil as well as a recent interest rate cut from the Bank of Russia.
China’s CSI 300 was a close second, with a year-to-date return of 27.4%. As we noted earlier in the year, despite fears over the trade war, Chinese equities have been lifted by a renewed stimulus in the form of increased spending and tax cuts at home and a more dovish Federal Reserve abroad.
Meanwhile, the UK’s FTSE 100 index has returned 10.1% since the start of the year. As Mould notes, while this is a decent result for investors, it has lagged other major markets in relative terms.
The worst performer among major markets has been Japan, albeit with a positive return of 6.6%. Mould says: “In historical terms that’s about the average you’d normally get on equities in a year, so investors shouldn’t really be disappointed, particularly as we’re still only halfway through the year.”
How did funds do?
Unusually, the best performing fund has been an index tracker: Pictet-Russia Index, with a return of 32.15%. The performance of this fund is largely down to the same reasons the Russia Trading System index performed well. However, the passive fund’s return was slightly higher due to following a slightly different index, the MSCI Russia Index.
The strong performance of Russian equities led to Aberdeen Eastern European Equity making a showing in the top 10 performing funds of the year so far, up 29.9%. The fund has a large exposure to Russian companies such as Lukoil, Yandex and Sberbank of Russia.
Disappointingly, China’s broad market return was not translated into returns for China-focused funds. The China/Greater China sector produced an average return of 16.45%. No China sector fund, though, was among the top 10 performers.
Elsewhere, heavily represented among the top 10 best-performers in the first half of 2019 are smaller company focused funds. After Pictet-Russia, the best performers were Brown Advisory US Smaller Companies and Brown Advisory US Mid-Cap growth, with returns of over 30% each.
Indeed, the best performing sector was North American Smaller Companies, with an average return of 21.52%.
Next on the list was the US-heavy technology and telecoms sector, with a return of 20% followed by the general North America sector with 18.6%. As Adrian Lowcock, head of personal investing at Willis Owen, notes: “US and technology funds were dominant.”
Also among the top 10 performers was LF Ruffer Gold, returning 29.4%. Lowcock comments: “Its performance reflects the rally in the gold price very recently and the subsequent move up in gold miners which we have seen in the second quarter of the year in particular.
|Pictet Russia Index||32.15|
|Brown Advisory US Smaller Companies||31.31|
|Brown Advisory US Mid-Cap Growth||31.28|
|Aubrey Global Conviction||30.37|
|LF Ruffer Gold||29.42|
|Threadneedle Pan European Focus||29.41|
|TM Cavendish AIM||29.40|
|Robeco Global FinTech Equities||29.33|
|Aberdeen Eastern European Equity||29.29|
|Legg Mason IF Martin Currie European Unconstrained||29.24|