Gam funds top performance tables as China outperforms in difficult month for markets

Gam Star Alpha Technology fund’s big bet on Alibaba pays off in October

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A trio of funds from Gam Investments topped performance tables in October as China and emerging markets outperform other regions, while Europe and the UK take a hit from further coronavirus lockdowns.

Gam Star Alpha Technology, managed by Mark Hawtin (pictured), returned investors 10.7% over the month, while Gam MultiStock China Evolution Equity returned 8.1% and Gam Star China Equity returned 7.6%, according to FE Fundinfo.

Products from New Capital, Polar Capital and Baillie Gifford meant Chinese equity funds made up half of the top-10 best-performing funds over the period, while Asian equity and global emerging market funds also featured.

Top 10 performing funds for October 2020

Funds 

Return %

Gam Star Alpha Technology

+10.74

Gam MultiStock China Evolution Equity

+8.1

Gam Star China Equity

+7.57

New Capital China Equity

+7.27

Polar China Stars

+6.99

New Capital Asia Future Leaders

+6.93

Baillie Gifford China

+6.81

LF Odey Absolute Return

+6.58

Carmignac Portfolio Emergents

+6.52

Guinness Sustainable Energy

+6.4

Source: FE Fundinfo

Fairview Investing consultant Ben Yearsley noted that, unlike other tech funds, the largest holding in the Gam Star Alpha Technology fund is Alibaba and the portfolio has a far lower weighting to North American equities than its peers.

The Investment Association China/Greater China sector topped its peers for the month of October delivering 4.1% while the Global Emerging Markets, Asia ex Japan and Asia inc Japan sectors all featured in the top five best performing sectors. The North American Smaller Companies sector was the only sector not exposed to the region that featured among the best-performing sectors delivering returns of 2.2%.

Yearsley noted Chinese exports in September increased 9.9% versus the previous year and that the Chinese economy is expected to grow 1.9% this year, according to the International Monetary Fund. By comparison, the US is expected to contract 4.3% and the UK economy is likely to shrink between 12% and 15%.

The UK stock market is also suffering, Yearsley said. “The lockdown announcement has probably ensured the UK market will have the worst year in a decade with the FTSE down 24% so far in 2020. 2018 has the worst record this decade falling 8.73%.”

Prime minister Boris Johnson announced on Saturday evening that England would go into a four-week nationwide lockdown from 5 November.

Yearsley added: “Markets obviously look ahead so vaccines and Brexit deals could yet save 2020; it would have to be a large year end Santa rally though. Having said that a huge amount of bad news is priced into the UK market and prices look cheap in many areas. Maybe the bargain hunters will be tempted.”

During October, the FTSE 100 fell 4.8% and the All Share dropped 3.8%, although Europe fared worse with the Eurostoxx down 5.7%.

As a result, the worst performing sectors over the month were entirely from the region with IA Europe ex UK funds suffering the worst on average with falls of 6.2%.

Worst-performing IA sectors for October 2020

Sector

Return %

Europe ex UK

-6.22

Europe inc UK

-5.56

European Smaller Companies

-4.69

UK Equity Income

-3.63

UK All Companies

-3.26

Source: FE Fundinfo

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