Fears over the impact of Brexit on growth as well as the effect of rising inflation and the weak pound on consumer prices held back share prices of domestic UK companies and forced median prices in the sector down an average of 2.5%, the worst performing fund, the SVM UK Emerging fund, lagged even further behind posting prices down 14.4% last year.
However, it was the only sector to perform so badly and despite the “air of gloom”, as QuotedData found, all other investment sectors ended the year positively with Natural Resources emerging as the best performing area.
In its report, QuotedData said: “The main driver behind the improvement in the fortunes of the Natural Resource sector was Trump’s election. Many investors became convinced that his policies, including promises to make substantial investment in America’s neglected infrastructure, would be beneficial for the sector.”
Promises of infrastructure investment and tax cuts made by President Donald Trump also saw a boom in optimism on US growth and a major push upwards on prices in the North American sector by 46% on average.
Trump’s election to the White House did however rock shares in Emerging Markets and Asia over concerns about trade and the potential for protectionist tariffs to come to the fore, but the sectors still generated good returns for UK investors with median prices up 28% and 27.9% respectively.
The two sectors were aided by the comparable strength of their currencies against sterling, with the weakness of the pound boosting the fortunes of most overseas shares.
QuotedData said: “There are many reasons why 2016 won’t be forgotten in a hurry but, for investors, it will most likely be remembered for two things – Brexit and the election of Trump. Both events had a marked impact on markets, the first triggering significant weakness in sterling (which flattered the performance of overseas assets) and the second giving rise to hopes of resurgent US economic growth.
“Other significant moves in markets included a recovery in the oil price and the continued strength of government bond markets in the UK and Europe (leading to lower yields). It is going to be fascinating to see how events play out in 2017. We think that markets might be in for a bumpy ride.”