Aberdeen Standard Indian delivers double digit gains despite Delta worries

India Equity funds dominated the fund performance tables in August propelled by financial services and technology stocks.

The offshore $1.4m Aberdeen Standard Indian Equity fund run by James Thom was top of the pile, gaining 11.17% during the month.

Performance figures between July and August showed Indian funds dominated the 10 best-performers list, despite worries about the coronavirus Delta variant.

The second-best performing fund was the SJP Emerging Markets Equity with a return of 10.7%, followed by the Invesco India Equity with 10.72%.

Fairview Investing director Ben Yearsley said that August is traditionally a quiet month for markets, and for once, tradition was broken.

“There doesn’t seem to be any specific catalyst for India’s strength, apart from a resilient economy in the face of the delta Covid variant which now seems under control,” said Yearsley.

Inflation is also under control, he added, and by most accounts the monsoon season had been good too.

Source: Fairview Investing, using FE Fundinfo data

Gold share tumbles in value

At the other end of the spectrum, FE Fundinfo data showed six gold-based funds in the bottom 10 bringing in minus returns.

“Since gold prices did not move in August there was no real catalyst for negativity,” said Yearsley.

The two worst-performing funds were the 7IM Income Portfolio with a -11.4% return and the 7IM Absolute Return Portfolio at -9.3%.

The rest, however, were precious metals funds. The bottom 10 included MFM Junior Gold with a -9.09% return, followed by Sanlam Gold and Resources at -6.41%, while Charteris Gold and Precious Metals came a close fifth with a -6.35% loss.

Source: FE Fundinfo

Despite an element of stocks trading ex-dividend, a slightly stronger dollar and the pickup in bond yields, there was no major change in gold shares.

Gold funds have been under pressure, following a sharp fall in prices in June.

On the commodity market, oil was more volatile partially stemming from hurricane Ida, with Brent finishing at $72.99, after starting at $75, and hitting a low of $66.

Private equity tops investment trust tables

The investment trust sphere was dominated in August by private equity, with the top two performers being Literacy Capital (26.8%) and BMO Private Equity (19.4%). This was followed by energy trusts Vietnam Holdings (16.5%) and Riverstone Energy Limited (15.4%) and then JP Morgan Smaller Companies (13.7%).

“Private equity trusts are one of the few sectors still trading with decent accounts to the underlying net asset value,” said Yearsley.

While the UK market was at a 14 year-high for M&A, with £143bn of deals announced.

“For the UK it is now all about takeovers – which company will be next to fall and at what premium to the previous closing price? Seemingly nothing is off the table, though it is happening mainly below the FTSE 100 where the action is occurring.

“Many commentators have been saying there is good value on the UK stock market, and now overseas investors agree, and are making bids for all manner of company.”

UK economy shows hopeful signs of growth

The job market indicated signs of revival, with unemployment rates falling to 4.7% at the end of June, while job vacancies reached almost one million.

Yearsley said that GDP data is “excellent” as the UK economy is growing by 4.8% in the second quarter of 2021. Although the economy has still not reached pre-pandemic levels.

In comparison to 2020, wages have also picked up strongly, but furlough payments have distorted payments.

Public sector borrowing figures also undershot ONS estimates. In July, borrowing was only £10.4bn, with the cumulative total for this financial year standing at £78bn, against the predicted £106bn.

Markets were also strong in August, with major indices rising, and the S&P hitting record highs. As of last Friday, it had hit a high point 53 times in 2021 alone, while the Nasdaq also hit an all-time high.