2nd September 2015
After a turbulent August, Hargreaves Lansdown looks the winners, losers and trends over the course of the last month…
Laith Khalaf, senior analyst at Hargreaves Lansdown, says: “August was a stormy month for international stock markets, with focus shifting from Greece to China, significantly raising the stakes for global economic growth. The sell-off precipitated by ructions in the Chinese economy has not been evenly felt across all assets though, with some faring significantly better than others.
“Safe havens like gold and bonds were the clear winners in the last month, while anything with a whiff of China or emerging markets has taken a drubbing. In the UK, tracker funds had a torrid month because of their relatively high exposure to the oil and mining companies that make up so much of the UK stock market.’
Best and worst performing funds
The top of the fund performance table is dominated by safe havens- absolute return funds, bonds and gold.
|10 best performing funds||August % return|
|City Financial Absolute Equity||6.73|
|WAY Charteris Gold Portfolio||4.38|
|Smith & Williamson Global Gold & Resources||4.01|
|JPM Multi-Asset Macro||3.85|
|Investec Global Gold||3.78|
|Threadneedle European Corporate Bond||3.57|
|M&G European High Yield Bond||3.39|
|Aberdeen European Corporate Bond||3.26|
|Royal London Euro Corp Bond||3.25|
|M&G European Corporate Bond||3.22|
A strong China theme dominates the bottom of the performance tables for August.
|10 worst performing funds||August % return|
|Standard Life Inv Gl EM Equity Unconstrained||-10.32|
|Legg Mason Martin Currie Greater China||-10.66|
|Fidelity China Consumer||-10.72|
|Threadneedle China Opportunities||-11.03|
|Matthews Asia Small Companies||-11.04|
|Matthews China Dividend||-11.09|
|Legg Mason IF Martin Currie China||-11.72|
|Matthews Asia Fds-China Small Companies||-12.47|
The bottom of the table in the UK All Companies sector illustrates how much worse tracker funds have done compared to active funds in the recent sell off. Eight of the ten worst performing funds in the sector were tracker funds.
The reason behind this is that tracker funds are obliged to hold large positions in the oil and gas and mining companies which make up around a fifth of the FTSE 100 index, whereas active funds have been able to avoid these areas, which have borne the brunt of the recent correction.
FTSE 100 trackers have been hit the hardest because they hold a greater concentration of these companies than slightly more diversified FTSE All-Share trackers.
|10 worst performing UK All Companies funds||August % return|
|Royal London FTSE 350 Tracker||-6.61|
|BCIF 100 UK Equity Tracker||-6.64|
|Clerical Medical FTSE100 Tracker||-6.66|
|RBS FTSE 100 Tracker Standard||-6.68|
|HSBC FTSE 100 Index||-6.68|
|Henderson UK Tracker||-6.69|
|Jupiter Growth & Income||-6.72|
|Marks & Spencer UK 100 Companies||-6.77|
|Purisima UK Total Return||-6.80|
|Halifax UK FTSE 100 Index Tracking||-7.27|
Tracker funds have risen sharply in popularity in recent years as price cuts and greater prominence have attracted greater investment, propelling the amount held in tracker funds above £100 billion for the first time earlier this year.
We expect this trend to continue, however while tracker funds are simple and low cost, they typically allocate money based on the size of a company, not its valuation or its prospects. Hence when the big blue chips suffer, tracker funds will follow suit.
Best and worst performing sectors
The top of the sector performance table for August is understandably populated by the safe haven fixed interest sectors, both cash and bonds.
|August % return|
|IA UK Gilt||1.23|
|IA UK Index Linked Gilt||0.96|
|IA Global Bonds||0.71|
|IA Money Market||0.02|
|IA Short Term Money Market||0.01|
Once again the bottom of the table holds no surprises, with China, Asia and emerging markets dominating.
|August % return|
|IA Asia Pacific Including Japan||-6.07|
|IA Global Emerging Markets||-7.39|
|IA Asia Pacific Excluding Japan||-7.86|
|IA China/Greater China||-10.06|