Fund winners and losers in the second quarter of 2024

The past three months have delivered strong returns for investors. From 1 April to 30 June, the FTSE All-Share index, including reinvested dividends, rose 3.7%. Meanwhile, the S&P 500 index of America’s largest shares also rose 3.7% and the MSCI World index rose 2.4%.

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This took their gains for the year, in sterling terms, to 16.3% for US shares, 12.9% for global shares, and 7.4% for UK shares. With inflation now running at 2% in the UK, investors have made a good “real” profit. Even cash rates, at around 5%, would have delivered a positive inflation-adjusted gain.

However, some open-ended funds and investment trusts have delivered far better – and worse – returns. We look at some of the standout winners and losers in the second quarter of the year.

Trusts that bounced back

Investment trust shares trade on the stock market, so their share prices can diverge from the underlying value of their assets. This is especially true for strategies that invest in unlisted assets, such as infrastructure, where fund managers have to estimate their value.

This means that some trusts’ shares can be very volatile. This has been the case for Gresham House Energy Storage, which has been under pressure from shareholders for cancelling dividends. While the shares delivered a total return of 68% over the past three months, over six months it is down -35% and over one year down -49%.

It has been a similar story at Hipgnosis Songs Fund, which has had to write down the value of its holdings and cancel dividends. However, there has been a recovering for the shares due to private equity interest, producing a 48% three-month return.

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Molten Ventures, up 54.7%, was another standout performer in the second quarter of the year. It invests in fast-growing private companies and optimism is returning to that part of the market due to expectations for lower interest rates and renewed excitement around tech shares.

It's on a good run, rising 32% over 12 months. However, over three years it has lost investors -59% and shares are still nearly 70% below their late 2021 peak.

Other trusts performing very well during the last quarter include abrdn New India and Cordiant Digital Infrastructure, which both rose by about a quarter.

The top open-ended funds and ETFs

Open-ended funds generally invest in listed assets, and the unit price of the fund is tied to the value of those underlying assets, so they do not experience as much volatility as investment trusts. Nevertheless, there were some very strong performances over the past three months.

UK smaller companies was a standout area, with TM CRUX UK Smaller Companies leading the pack with a 15.4% three-month return, followed by Schroder UK Smaller Companies on 13.5%. JPMorgan UK Small Cap Growth & Income returned 13.5% too.

Some optimism has returned to UK shares this year as interest rates look set to fall soon and the economy avoided a recession. Smaller companies, which are sensitive to economic news and are even more lowly valued than large shares, are bouncing back from a difficult 2022 and 2023.  

India was also a standout sector, with Stewart Investors Indian Subcontinent Sustainability rising 14.9% over the past three months. Other strong open-ended India funds were Invesco India Equity, abrdn Indian Equity and Alquity Indian Subcontinent.

India continues to be one of the hottest markets in the world, as economic growth accelerates, multinational companies look for alternatives to manufacturing in China, and its recent election delivered another win for market favourite Narendra Modi.

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Meanwhile, precious metal prices rose, with Jupiter Gold & Silver and SVS Baker Steel Gold & Precious Metals delivering 14.5% returns over three months. The gold price has risen about 15% this year. These funds invest in the physical commodities, via exchange-traded funds (ETFs), as well as mining companies.

The technology sector continued its strong recovery from a very challenging 2022, with tech indices hitting new all-time highs throughout 2024.

One of the top funds in the second quarter was L&G Global Technology Index Trust. Investment trust Allianz Technology Trust also performed well, alongside technology ETFs iShares S&P 500 Information Technology Sector UCITS ETF and Xtrackers MSCI USA Information Technology UCITS ETF. These tech funds rose about 14% each over three months.

Meanwhile, driven by a 20% return from Taiwan Semiconductor Manufacturing Company, iShares MSCI Taiwan UCITS ETF and Xtrackers MSCI Taiwan UCITS ETF returned about 13% each.

Past performance is not a guide to future performance.

What about the worst performers?

Formerly JPMorgan Russian Securities, JPMorgan Emerging Europe Middle East & Africa Securities dropped -23% last quarter. This included a -30% drop in April when news broke that JPMorgan is in a court battle to stop a Russian bank from seizing its assets.

Meanwhile, Regional REIT fell -22.5%, with the property investor facing concerns about solvency and turning to markets to raise more cash.

One sector that had a lot of poorly performing strategies was Latin America. This included generalist funds, such as BlackRock GF Latin America, Schroder ISF Latin American, Barings Latin America and iShares MSCI EM Latin America UCITS ETF, which all fell about -14%. Xtrackers MSCI Mexico Ucits ETF dropped -17% and HSBC Brazil Equity dropped -14%.

Latin American stock markets are often heavily dependent on the mining and oil sectors. But because commodity prices are falling (with the exception of gold and silver) and inflation is subsiding, these types of business are suffering.

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While Taiwan did well last quarter, other parts of Asia did not: HSBC MSCI Indonesia UCITS ETF fell -14.2% and Xtrackers MSCI Philippines UCITS ETF fell -11.2%

Crypto also had a bad quarter. Invesco CoinShares Global Blockchain UCITS ETF lost -9.5%, linked to falling cryptocurrency prices.

Past performance is not a guide to future performance.