Fund winners and losers in December 2020

The best-performing fund in December was a UK small-cap fund. Hannah Smith names the 10 top and bottom fund performers. 

Goodbye and good riddance to a turbulent year. But, as the UK enters another national lockdown in the first week of January, it seems clear that 2021 won’t be plain sailing either. 

In the investment world, fortunes were split in 2020. The FTSE 100, for example, posted its worst performance in a decade to fall nearly 12% over the year, in contrast to the strong performance from other markets such as the S&P 500, up 18%.  

Looking just at the month of December, the top and bottom fund performers were quite a mixed bag, with China equity, technology and precious metals funds featuring among the top funds. At the bottom of the table were Japan equity and Japanese smaller companies funds, and infrastructure and energy funds.

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Small caps shine

Perhaps surprisingly, the best-performing fund for December was a UK small-cap fund. Premier Miton UK Smaller Companiesreturned 17% as a value revival, a Covid-19 vaccine and a Brexit trade deal boosted sentiment on cheap UK equities.

In second place was New Capital China Equity, returning an impressive 15%, while Marlborough Technology completed the top three to gain 14% over the month. Fund house Marlborough boasted three funds in the top 10, with its Marlborough Nano Cap Growth and Marlborough UK Micro Cap Growth both performing strongly, while Octopus UK Micro Cap Growth also made the winners’ list. Elsewhere, precious metals funds from Merian Gold & Silver and DMS Charteris Gold and Precious Metals featured, along with the Barings Korea Trust.

Interestingly, there are energy names to be found among both the top and bottom funds – Guinness Sustainable Energy performed strongly to return almost 12%, while BlackRock GF World Energy languished at the bottom of the charts, down almost 3%.

Top 10 funds in December 2020 

Source: FE Analytics. Table returns 30 Nov 2020 to 31 Dec 2020.

Japan funds struggle

The bottom 10 funds for December fell between 2% and 4% over the month, with the worst performer being theLegg Mason IF Japan Equity fund, down nearly 4%. Just behind it was theBaillie Gifford Japanese Smaller Companies fund, while a third Japan fund – GAM Star Japan Leaders - just makes it into the bottom 10. Veritas Global Real Return and Wellington Global Total Return also struggled to make a positive return in December, while infrastructure funds from First Sentier and L&G Global Infrastructure Index also made the losers’ list.

Bottom 10 funds in December 2020 

Source: FE Analytics. Table returns 30 Nov 2020 to 31 Dec 2020.

At the sector level, the Investment Association UK Smaller Companies sector was the top performer over the month, up 7.5%. The second best-performing sector was IA Global Emerging Markets, up 7.5%, following by European Smaller Companies, with an average gain of 5.3%. North American Smaller Companies and Technology & Telecoms also continued their strong runs, with returns of 4.9% and 4.8%.

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Looking forward, the UK could be the bright spot for investors this year, suggests Ben Yearsley, director at Shore Financial Planning. “I think the UK is set for a period of outperformance as markets are cheap and most of the barriers preventing a positive outlook have receded.” He suggests that small- and mid-cap funds especially could prove to be interesting picks for investors for 2020.