FE Fundinfo: March top 10 dominated by gold funds

Commodities and natural resources on top for sector average



Gold has flooded the top 10 best performing funds for March, filling eight of the 10 slots, while commodities and natural resources led by sector average, according to FE Fundinfo.

Baker Steel Gold & Precious Metals, Ninety One Global Gold and Charteris Gold & Precious Metals all returned over 20% for the month, leading the board. Ben Yearsley, director of Fairview Investing Limited, said outside of gold and commodities, few sectors have stood out.

“With the price of an ounce rising almost 10% in March it’s no surprise seeing gold equities finally coming to the party, though you do wonder where they’ve been for the last year,” Yearsley said.

See also: Gold in the green: investors return to safe haven asset amid rising uncertainty

Sinking to the bottom for funds, the Oxeye Hedged Income fund dropped 10.2%, more than double the loss of the next worst performer, Guinness China A Share, which fell by 4.8%. By sector, the worst performers included European high yield bond, global EM bonds local currency, UK direct property, India and Indian subcontinent, and China and Greater China. However, each of the sectors eked out a positive return, with lowest performer Euro high yield bond returning 0.1%.

“Optimism is the name of the game – well if you’re a fund manager it is,” Yearsley said. “Fund managers are at their most optimistic for two years – all we need now is those well-known mystic megs, economists, to come to the party. On a serious point, the hard landing scenario seems to have gone now with soft or no landing the emperor’s new clothes.”

The highest performing sector, commodity and natural resources, returned 7.7% for the month, followed by UK equity income, UK index linked gilts, UK all companies, and property other.

“After a strong FTSE showing last month with banks and insurance doing well alongside commodities, it isn’t much of a surprise seeing the UK Equity Income sector coming a creditable second in March gaining 4.42%,” Yearsley said.

“Bumper dividends are helping alongside numerous buybacks. It was such a strong month that all IA sectors were profitable – admittedly the EUR High Yield Bond sector only delivered 0.1% but it’s still a profit.”

Across investment trusts, the Schiehallion fund returned 38.7% to top the charts, followed by Golden Prospect Precious Metals and Digital 9 Infrastructure. Yearsley pointed out a positive return from Hipgnosis Songs Fund as well as Digital 9.

“Obviously both trusts are a long long way from their highs, but at least both had a modicum of good news for their suffering shareholders,” Yearsley said.

“You can tell risk is back in vogue as Baillie Gifford Schiehallion took top spot gaining 38% and Scottish Mortgage also made the top 10 after activist investor Elliott took a 5% stake. What is their game plan though? Narrowing the discount seems a tall order.”