September was an especially difficult month for investors and competition was pretty fierce about which funds were the best and worst performers.
Ben Yearsley, director at Fairview Investing, said: “There aren’t many crumbs of comfort for investors after a torrid September, except that yield and income are now much easier to find. Gilt yields were so attractive I actually bought two last week and became an investor for the first time since 2009.
“Fixed interest generally looks far more attractive now on a risk/reward basis than it has in many a year. US Treasuries and gilts have seen yields increase and spreads on some fixed interest have widened. Yields may of course increase further.”
As was likely expected, property had a particularly woeful month, taking eight of the 10 ‘top spots’ in the worst performers list compiled by Fairview Investing using data from FE Analytics. The only outliers were Columbia Threadneedle’s Overseas Equity Linked UK Inflation fund and Scottish Widows UK Index Linked Tracker fund.
| Funds – one month (bottom 10) | Return % |
| NFU Mutual UK Property Shares | -20.95 |
| Gravis UK Listed Property | -20.17 |
| Abrdn UK Real Estate Share | -20.13 |
| Cohen & Steers European Real Estate Securities | -19.93 |
| Janus Henderson Horizon Pan European Property Equities | -19.01 |
| CT European Real Estate Securities | -18.81 |
| CT Overseas Equity Linked UK Inflation | -17.67 |
| Premier Miton Pan European Property Share | -17.52 |
| Scottish Widows UK Index Linked Tracker | -17.48 |
| Abrdn European Real Estate Share | -17.41 |
Source: FE Analytics
On a more positive note, there were some stand out performers which, according to Yearsley, were to be found among esoteric, trend-driven, or absolute return funds. Oxeye Hedged Income topped the tables with an 18% return.
| Funds – one month (top 10) | Return % |
| Oxeye hedged Income | +18.09 |
| Fidelity Diversified Markets | +13.56 |
| Winton Trend | +11.67 |
| PGIM Wadhwani Keynes Systematic Absolute Return | +8.11 |
| 7 IM Absolute Return | +7.8 |
| AQR Managed Futures | +7.24 |
| NB Uncorrelated Strategies | +7.17 |
| Winton Diversified | +6.73 |
| PGIM Emerging Market Total Return Bond | +6.02 |
| Bluebay Global Sovereign Opportunities | +5.76 |
Source: FE Analytics
There were also some ‘normal’ funds in the top 10, such as Axa Framlington Biotech, whose 4.5% gain was fuelled by a weak pound, and a fairly resilient healthcare sector.
In fact, beyond a trio of US dollar-denominated bond sectors, healthcare and Latin America were the only asset classes to deliver a return in September.
| Fund Sectors – one month (top five) | Return % |
| USD Government Bond | +1.25 |
| USD Corporate Bond | +0.3 |
| USD Mixed Bond | +0.1 |
| Healthcare | +0.04 |
| Latin America | +0.01 |
Source: FE Analytics
That only five sectors generated a positive return in September is proof positive that it was a rough month – but gilts unsurprisingly bore the brunt of the market turbulence.
Initial reports suggested that chancellor Kwasi Kwarteng approved £65bn of central bank bond purchases in the wake of his ill-received mini-budget, but Bloomberg has since reported that this figure could be as high as £100bn.
| Fund Sectors – one month (bottom five) | Return % |
| UK Index Linked Gilts | -17.63 |
| Property Other | -10.83 |
| UK Smaller Companies | -9.24 |
| European Smaller Companies | -9.09 |
| UK Gilts | -8.39 |
Source: FE Analytics
