Best performing funds this summer
St Leger Day, this year falling on the 14 September, marks both the end of the summer sporting social calendar and the day some market timers reinvest. Referring to a time when stock market traders spent the summer attending sporting events and therefore had their eyes off the investment ball, the adage suggests that investors should “Sell in May and go away, come back on St Leger Day”.
But anyone following the adage this year would likely be kicking themselves today because, unlike the weather, investments in most sectors have been shining: 52 out of 56 Investment Association sectors have had positive returns during the summer*.
Best performing sectors
The best performing sector was IA Property Other, where the average fund returned 12.85%*. IA Infrastructure was second (up 9.28%*) and IA India/Indian Subcontinent was third with average returns of 9.13%*. IA UK Index Linked Gilts was in fourth place (5.96%*) and IA Healthcare in fifth (5.84%*).
The four sectors that had negative returns were IA China/Greater China (-11.62%*), IA Latin America (-9.20%*), IA Commodity/Natural Resources (-6.56%*) and IA Global Emerging Markets (-0.84%*).
Benefiting from rate cuts
After a long wait, the summer months saw interest rate cuts start to come through. In June, the European Central Bank finally cut rates, alongside the central bank of Canada. While the Bank of England cut rates in August and the Federal Reserve announced its first cut in interest rates in four years yesterday, September 18th.
These cuts were neither as fast, nor as extensive, as many economists believed – or financial markets hoped. However, data suggests those sectors which tend to be prime beneficiaries — such as property and infrastructure — are already reaping the benefits.
Falling interest rates reduce the cost of mortgages, making home purchases more affordable, which should enable housebuilders to thrive. The sector is also poised to benefit from the new Labour government’s commitment to build 1.5 million new homes over the next five years. We would also anticipate an upswing in the real estate sector due to reduced borrowing costs, increased property values and higher demand.
Top 10 performing funds and trusts on FundCalibre this summer*:
Rank | Fund/Trust | Percentage returns over the summer* |
1 | 17.59% | |
2 | 15.68% | |
3 | 15.16% | |
4 | 15.02% | |
5 | 14.67% | |
6 | 14.14% | |
7 | 13.17% | |
8 | 12.22% | |
9 | 12.08% | |
10 | 11.55% |
*Source: FE Analytics, total returns in sterling, 1 May 2024 to 13 September 2024
This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. However, the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions.Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice.Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.
