Funds investing in technology led the way in 2023, while Chinese-invested portfolios finished bottom of the rankings according to data from FE Fundinfo.
Fuelled by the Nasdaq hitting record highs, the IA Technology & Technology Innovation sector recorded a 39.29% return for the calendar year placing it top of the sector rankings, while the IA China/Greater China finished bottom with a fund average fall of 20.35%.
“I don’t think many thought tech would be the standout performer of 2023, I certainly didn’t,” said Ben Yearsley, director at Fairview Investing. “In what was a surprise to many, the never never rally of a few years ago has reappeared with the Nasdaq reaching an all-time high.”
Largely driven by the performance of the ‘magnificent seven’, the Nasdaq ended the year returning 45.44%, making it the best performing index of the year.
Elsewhere from a sector perspective, IA Latin America finished second in the rankings with a gain of 23.23%, which Yearsley noted was possibly driven by a weaker dollar in the absence of commodity bull run.
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Taking the bronze medal for the year was the IA India/Indian Subcontinent sector, which registered an average fund return of 17.05%, with the North America (16.75%) and Europe (14.08%) sectors completing the top five.
Despite registering the biggest loss in 2023, Yearsley expects sentiment to China “must change” at some point with shares looking “ridiculously” cheap and recently India overtaking Hong Kong in market-cap terms.
“China funds dominated the bottom 10, bottom 20 and bottom 30 performers,” he said. “The only other notable theme at the bottom was energy transition and solar related funds. These stocks had a perfect storm in 2023 of rising rates, falling power process, and increased costs.”
While 2023 didn’t turn out as most predicted, looking forward Yearsley said 2024 promises to be a fascinating year with politics dominating the picture.
“Will Donald Trump regain the presidency? Will Keir become UK PM? And will Europe head to the right?” he said. “Probably the only certainty is Modi winning another term in India with a currently high-flying economy and stockmarket.”
This story originated on our sister title, International Adviser.