US small caps topped performance charts while tech wobbled in a marathon month of politics in July, which saw elections in the UK and France, an assassination attempt on Republican candidate Donald Trump, and the withdrawal from the Presidential race of incumbent Joe Biden.
The IA North American Smaller Companies sector returned 5.3% over the month, according to FE fundInfo data, ahead of Property (Other), which was up 4.51%.
Small-cap funds in general enjoyed a strong month, with nine of the top 10-performing strategies having a small or mid-cap mandate.
| Fund Sectors – One month (top five) | Return % |
| North American Smaller Companies | 5.32 |
| Property Other | 4.51 |
| UK Smaller Companies | 4.25 |
| Infrastructure | 4.1 |
| UK Equity Income | 4 |
UK equity sectors also received a boost from newfound political stability, with UK Smaller Companies up 4.25% while UK Equity Income returned 4%.
Ben Yearsley, director at Fairview Investing, said: “There is a lot to be said for political certainty, even if you aren’t sure what that certainty will lead to! The UK is derided as boring but sometimes that pays dividends.
“UK stocks have had a nice bounce since Labour’s election victory and with economic news good and a rate cut possibly today, the outlook looks set fair. We are in the midst of reporting season and so far, there don’t seem many howlers either, with more share buybacks a notable feature. The de-equitisation of the UK market continues at pace.”
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There was also a place for UK-focused funds, with Aviva UK Listed Small & Mid Cap returning 7.94% in the month.
By contrast, Technology & Technology Innovation funds dropped by an average 5.68%. In particular, Liontrust Global Technology and Polar Global Technology suffered the sharpest drops, falling 12.49% and 10.81% respectively.
| Funds – One month (bottom five) | Return % |
| Liontrust Global Technology | -12.49 |
| Polar Global Technology | -10.81 |
| SVS Aubrey China | -10.36 |
| Liontrust Global Innovation | -10.13 |
| Comgest Growth China | -9.03 |
Investment trusts
In terms of investment trusts, Fairview’s Yearsley said the top performers were a “random selection”.
Downing Strategic Micro Cap returned 40% in the month, though the trust is set to wind up and is handing money back to shareholders.
“That trust hasn’t been a happy ride for shareholders as there haven’t been many takers for micro cap value stocks since that trust launched,” Yearsley said.
Elsewhere, Warana Capital Alternative Liquidity was up 24.3%, while Castelnau Group rose 31.17%.
“From a sector perspective it was similar to the open ended world with smaller companies, UK and property doing well. North American Smaller Companies took the gold medal with a rise of over 12%,” Yearsley added.
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