The artifical intelligence (AI) boom drove tech funds to become the top performers in the first half of 2023, according to data from FE Analytics.
The average fund in the IA Technology & Technology Innovations sector returned 24.6% for the six months to the end of June. Across that period, Liontrust Global Technology was the best-performing fund, returning 39.9%.
Best-performing sectors – 6 months to 30 June
| Fund Sectors – 6 month (top five) | Return % |
|---|---|
| Technology & Technology Innovation | 24.59 |
| Latin America | 11.88 |
| North America | 8.15 |
| Europe ex UK | 7.71 |
| Europe inc UK | 7.07 |
See also: Investors must be wary of ‘AI losers’ as tech valuations spike
Elsewhere, Latin America-focused funds returned 11.9% over the six months, the second highest performer. In June alone, the sector was up 7.6% with HSBC Brazil Equity (12.5%), JPM Brazil Equity (11.6%), and BNY Mellon Brazil Equity (11.2%) the three top performers last month.
Commenting on fund performance in the first half of the year, Fairview Investing director Ben Yearsley said: “It is difficult to know sometimes whether to be positive on markets as so many commentators emphasise the doom and gloom, yet equity markets have sailed on, especially Nasdaq. The Fed putting a pause on the rate hiking cycle helps, but it doesn’t feel like this is quite the end as the US economy has been resilient – money growth figures though indicate a recession is imminent.
“Turning now to performance over the first half the the year and it’s Nasdaq that is the star of the show with a 30% gain so far in 2023. However, a commendation should also go to Japan with the Topix rising 22%,” he added.
“From a fund sector perspective, it is tech, driven by Nasdaq and the rise of AI, that has stolen the show.”
Worst-performing sectors – 6 months to 30 June
| Fund Sectors | Return % |
|---|---|
| China | -12.74 |
| Commodity/ Natural Resources | -6.55 |
| Property Other | -4.69 |
| Infrastructure | -4.67 |
| UK Smaller Companies | -4.08 |
China propped up the table of worst-performing sectors in 2023 so far, falling 12.7%. Meanwhile, rising interest rates hit the property and infrastructure sectors.
From an individual fund perspective, HSBC MSCI Turkey fell 23% over the six months.
Yearsley added: “The poor performers last month were focused on property and gold primarily, though Brook Absolute Return, part of the Odey Asset Management stable, was also in the ten worst performing funds.
“One fund to note in the bottom 10 is JPM Global Macro Opportunities which fell 7.2% – this fund had a few wobbles in 2022 and performed in a way the managers would not have expected. It might be doing the same again.”
The investment trust universe followed a similar pattern to its open-ended counterpart, with the tech (14.8%) and Latin America (13.8%) sectors achieving the highest average returns in 2023.
