Backing UK small caps in 2023
This article first appeared on professionaladviser.com on 9th January 2023 I don’t think many...
Doncaster hosts the Cazoo St Leger Day this Saturday. The oldest of Britain’s five horse-racing Classics, and the last of the five to be run each year, the St Leger marks 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 the main sector have been shining: 49 out of 54 IA sectors have had positive returns during the summer.
The best performing sector was IA European Smaller Companies, where the average fund returned 11.43%*. IA UK Smaller Companies was second (up 10.87%*) and IA UK Index Linked Gilts was third with average returns of 10.52%*. IA Property Other was in fourth place (10.41%*) and IA Technology and Telecommunications in fifth (10.37%*).
The five sectors that had negative returns were IA China/Greater China (-6.28%*), IA Asia Pacific ex Japan (-0.94%*), IA EUR Corporate Bond (-0.53%*), IA EUR Mixed Bond (-0.09%*) and IA Short Term Money Market (-0.05%*).
Fittingly, as we’ve been enjoying an Indian summer over the past few days, when you look a little closer at individual funds, Indian equity portfolios have performed best this summer.
16 of the top 20 performing funds were Indian equity portfolios including Elite Rated GS India Equity Portfolio and Stewart Investors Indian Subcontinent Sustainability which returned 24.71%* and 20.01%* respectively.
The Indian stock market is currently benefiting from continued domestic interest, given the increasing economic momentum. It remains one of the FundCalibre research team’s preferred long-term emerging market investments.
Chinese equities on the other hand have suffered due to increased regulation by the Chinese government in sectors such as education and technology. As a result, the other end of the summer performance table was dominated by portfolio investing in this market: 17 out of the 20 worst performers were Chinese equity funds.
|Rank||Fund/Trust||Percentage returns over the summer*|
|1||GS India Equity Portfolio||24.71%|
|2||Stewart Investors Indian Subcontinent Sustainability||20.01%|
|3||FSSA Japan Focus||19.35%|
|4||Aberdeen Standard SICAV I Global Mid-Cap Equity||18.59%|
|5||TR Property Investment Trust||18.52%|
|6||LF Montanaro UK Income||18.27%|
|7||European Opportunities Trust||17.23%|
|9||LF Montanaro Better World||16.80%|
|10||Jupiter European Smaller Companies||16.52%|
*Source: FE fundinfo, total returns in sterling, 1 May 2021 to 8 September 2021