How the fund and trust winners of 2020 have fared so far this year
Most of last year’s top performers have seen their returns cool.
13th July 2021 13:52
by Kyle Caldwell from interactive investor
Most of last year’s top performers have seen their returns cool.
Most top-performing funds and investment trusts in 2020 underperformed their respective sectors in the first half of this year, research by interactive investor has found.
Overall, only seven of the 20 funds and investment trusts outperformed their respective sectors over the six-month period. Five of the 13 underperformers produced negative returns, figures from FE Analytics show.
In many cases this can be attributed to the market rotation that has been taking place since last November’s vaccine announcements. The rotation has reversed the decade-long trend of growth shares outperforming value shares. It is anyone’s guess whether value will continue to have the upper hand for a sustained period of time, but if this does continue to play out it will prove to be a headwind for funds investing in growth shares.
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Five funds run by Edinburgh-based Baillie Gifford featured in the top 10 fund performers of 2020. Just one has outperformed its sector over the past six months – Baillie Gifford Positive Change – which is up 11.6% versus 10.7% for the average global fund. The firm’s three other global funds have underperformed: Baillie Gifford Long Term Global Growth, Baillie Gifford Global Stewardship and Baillie Gifford Global Discovery. The latter has fallen short the most, up just 1.2%.
Baillie Gifford describes its growth approach as “looking ahead five years and longer, seeking out companies that we believe can at least double earnings in this time frame, and that will still be growing rapidly when they get there. Ideally, we look for at least the possibility of much more.”
T. Rowe Price Global Technology Equity managed to buck the trend, despite tech shares being caught up in the market rotation. The fund returned 12.1% versus 10.8% for its sector – technology and telecommunications.
Four US funds that were in the top 10 performers of 2020 all underperformed in the first half of this year: Baillie Gifford American, Morgan Stanley US Growth, Morgan Stanley US Advantage and Premier Miton US Smaller Companies.
The remaining fund – MFM Junior Gold – was the worst performer in the first half of this year, down 6.9%. Gold funds mainly invest in gold mining companies, which tend to rise and fall more than the gold price.
It is worth pointing out that the specialist sector, which MFM Junior Gold sits in, contains various specialist fund strategies, so its performance comparison against this sector should be taken with a pinch of salt.
How top 10 funds of 2020 have fared so far in 2021
| Fund | Return (%) | Fund sector (IA*) | Sector average (%) |
|---|---|---|---|
| Baillie Gifford American | 12.2 | North America | 14 |
| T. Rowe Price Global Technology Equity | 12.1 | Technology & Telecommunications | 10.8 |
| Morgan Stanley US Growth | 11.9 | North America | 14 |
| Baillie Gifford Positive Change | 11.6 | Global | 10.7 |
| Baillie Gifford Long Term Global Growth Investment | 10.1 | Global | 10.7 |
| Baillie Gifford Global Stewardship | 7.8 | Global | 10.7 |
| Morgan Stanley US Advantage | 5.5 | North America | 14 |
| Premier Miton US Smaller Companies | 5.1 | North American Smaller Companies | 12.4 |
| Baillie Gifford Global Discovery | 1.2 | Global | 10.7 |
| MFM Junior Gold | -6.9 | Specialist | 7.3 |
Source: FE Analytics. Performance period 1 January 2021 to 1 July 2021. *IA stands for Investment Association.
Investment trusts fared better, with half continuing to outperform
Investment trusts fared better than funds, with five of the top 10 performers from 2020 outperforming their respective sector in the first half of this year.
Pacific Horizon (LSE:PHI), Fidelity China Special Situations (LSE:FCSS) and Scottish Mortgage (LSE:SMT) led the pack, with returns of 14.1%, 11.5% and 9.6%. The trio have outperformed their respective sectors.
Scottish Mortgage’s share price hit a wobble earlier this year, with the trust caught up in the wider tech sell-off from mid-February to early March. Its share price has been making up ground since then and is currently trading just below 1,300p per share. From peak to trough during its sell-off (the shares fell from 1,415 to a low of 950p), the price declined by 30%.
- Have value funds led the pack since vaccine breakthroughs?
- UK vs Europe: how funds and trusts have fared five years on from Brexit
- Funds and trusts in first half of 2021: best and worst performers
The other two trusts that outperformed their sectors over the past six months were Pershing Square Holdings (LSE:PSH) and JPMorgan China Growth & Income (LSE:JCGI).
The remaining five trusts all underperformed: Baillie Gifford US Growth Trust (LSE:USA), Allianz Technology (LSE:ATT), Edinburgh Worldwide (LSE:EWI), Golden Prospect Precious Metals (LSE:GPM) and The Biotech Growth Trust (LSE:BIOG).
How top 10 investment trusts of 2020 have fared so far in 2021
| Investment trust | Return (%) | Trust sector (*AIC) | Sector average (%) |
|---|---|---|---|
| Pacific Horizon | 14.1 | Asia Pacific | 6 |
| Fidelity China Special Situations | 11.5 | China/Greater China | 5.2 |
| Scottish Mortgage | 9.6 | Global | 7.1 |
| Baillie Gifford US Growth Trust | 7.9 | North America | 15 |
| JPMorgan China Growth & Income | 6.3 | China/Greater China | 5.2 |
| Pershing Square Holdings | 5.6 | Hedge Fund | 3.9 |
| Allianz Technology | -0.8 | Technology & Media | 7.1 |
| Edinburgh Worldwide | -4.5 | Global Smaller Companies | 7.6 |
| Golden Prospect Precious Metals | -5.1 | Commodities & Natural Resources | 23 |
| The Biotech Growth Trust | -10.4 | Biotechnology & Healthcare | -0.7 |
Source: FE Analytics. Performance period 1 January 2021 to 1 July 2021. *AIC stands for Association of Investment Companies.
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