Best performing funds of 2021

We are now just a couple of sleeps away from Christmas and the excitement in our household is building. And my children aren’t alone in wanting Santa Claus to arrive– investors are also keeping their fingers firmly crossed that he’ll make an appearance in the form of a Santa Rally during the last few trading days of the year.

What is a Santa Claus rally?

A Santa Claus rally describes a sustained increase in the stock market that occurs in the last week of December through the first two trading days in January.  There are a number of explanations for the causes of such a rally including tax considerations, a general feeling of optimism amongst investors, and the receiving of holiday bonuses.

Considering the sheer number of investment myths and legends that do the rounds, the most obvious question to ask is: Does the Santa Rally actually exist?

Well, the answer appears to be yes, according to an analysis by Schroders, which found US stocks have recorded a positive return in 77.9% of Decembers since 1926.

Tom Stevenson, investment director, personal investing, at Fidelity International, says that the run-up to Christmas is traditionally positive for UK markets too. “Shares have risen in 25 of the past 30 Decembers here in the UK,” he said. However, he quickly added a note of caution for those earmarking bumper returns. “It’s a brave call to bet on a 26th positive reading this time,” he said. “But who knows?”

Will it happen this year?

With so many potential problems and uncertainties still swirling around markets, a visit from Santa this year could be in doubt.

Top of his naughty list is clearly the Omicron variant of Covid-19, as its rapid spread around the world has already caused a tightening of restrictions.

But is a Santa Claus rally needed anyway? Global stock markets have actually performed pretty well in 2021, and it’s been a positive year for many investors. Out of the 57 sectors in the Investment Association universe, 41 have had positive returns and 17 are in the double digits*.

Best performing funds and sectors

The best performing sector has been IA India/Indian Subcontinent, where the average fund has returned a huge 26.7%*.

It’s followed by IA North America (25.1%*) and IA Commodity/Natural Resources (22%*), which benefited from rising gas and oil prices.

Indian equities started outperforming in the summer and have continued their steady gains, thanks to good growth, cheaper valuations and a gradual improvement in the Covid-19 situation.

The best performing Elite Rated fund in 2021 has been Goldman Sachs India Equity Portfolio, which has returned 34.8%*. It is followed closely by Stewart investors Indian Subcontinent Sustainability which returned 32.4%*.

Other funds on Santa’s nice list include Liontrust UK Micro Cap (30.8%*), IFSL Marlborough European Special Situations (28.7%*) and Brown Advisory US Flexible Equity (27.6%*), which make up the rest of the top five.

At the other end of the table, the IA Latin America sector was by far the worst performing, with average losses of 12.7%*. It was followed by IA China/Greater China (-7.8%*) and IA Global Emerging Market Bonds Local Currency (-6.9%*).

Top 20 performing Elite Rated funds in 2021*

RankFundPercentage return year to date*
1Goldman Sachs India Equity Portfolio 34.80
2Stewart Investors Indian Subcontinent Sustainability 32.41
3Liontrust UK Micro Cap 30.76
4IFSL Marlborough European Special Situations 28.72
5Brown Advisory US Flexible Equity 27.63
6Lazard US Equity Concentrated 27.20
7JPM US Equity Income26.13
8Schroder Income 25.61
9Slater Growth 25.37
10AXA Framlington American Growth 25.02
11Aberdeen Standard SICAV I Global Mid Cap Equity24.87
12GAM UK Equity Income 24.61
13Guinness Global Innovators23.99
14FTF Martin Currie US Unconstrained 23.23
15MI Chelverton UK Equity Growth23.19
16Guinness Global Equity Income 22.63
17Polar Capital Global Healthcare Trust PLC 22.54
18Comgest Growth Europe ex UK 22.44
19Artemis US Extended Alpha 22.18
20Fidelity Special Values PLC 22.06

*Source: FE fundinfo, total returns in sterling, 1 January 2021 to 16 December 2021

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.