September’s top-performing funds: UK markets strengthen off the back of bank and energy sectors

UK markets performed strongly this September as the FTSE finished as the best-performing stock exchange for the month, followed closely by Japan.

On the year, the FTSE has gained 5.5%, driven by healthy bank and energy sectors. Brent crude oil from $86.86 (£71.63) per barrel at the end of August to $95.31 (£78.60) at the end of September. Guinness Global funds capitalised on the growth, with two energy funds gaining over 8% in September, putting them in the top spots for returns. Funds including Blackrock BGF World Energy, AQR Systematic Total Return, AQR Style Premia, and Winton Trend also performed strongly, gaining spots in the top ten, according to FE Fundinfo.

Ben Yearsley, the director of Fairview Investing Limited, said: “Energy topped the table after the almost $10 a barrel rise in price in September – central bankers must be getting nervous about the impact on inflation.

“Energy equity investors on the other hand can rub their hands in glee as this will help continue the oil train… Don’t forget the likes of Shell and BP cut costs drastically during Covid lowering the cost of producing a barrel.”

India funds also produced a firm return this month, with open ended funds gaining 4.6%, placing them comfortably at the peak of the top five fund sectors. The second-place finisher, commodity and natural resources, ended with a 2% return in comparison. Furthering the success of India funds, Jupiter India Select earned a spot in the top-performing funds overall.

“The Indian market is always expensive, and remains so today, but seems to justify this with long term earnings keeping pace with growth in the economy – something China always seemed to struggle with,” Yearsley said.

Yearsley also notes that some of India’s economic success stems from their dealings with Russia, which provide them with oil on a steep discount.

A few areas have underperformed in the past month, led by the inflation-linked UK Index Linked Gilts, which had a return of -3.48%. European smaller companies and infrastructure also sank in the past month. The ten-year gilt, however, has continued to increase its yields from 4.36% to 4.44%.

In terms of individual funds, Baillie Gifford Global Discovery fell hardest with a -8.52% return, along with a mix of funds investing in gold and precious metals, including Jupiter Gold & Silver, Baker Steel Gold & Precious Metals, and Charteris Gold & Precious Metals.

“The trends last month, if there were any, was poor performance from gold and clean energy funds,” Yearsley said.

One-month best and worst-returning IA funds – Performance figures 31/8/23 to 30/9/23