Best performing funds this summer

It’s the St Leger this Saturday – the oldest of Britain’s five horse-racing Classics, and the last of the five to be run each year. It marks the end of the summer sporting social calendar, and what a summer it has been! From Cricket World Cup Super Overs to one of the greatest finals in Wimbledon’s history, sport has been a welcome distraction from the political chaos around us.

St Leger’s Day is also an investment adage that refers to the time when stock market traders spent the summer attending such sporting events. As a result of less trading, and their eyes not being on the investment ball (pardon the pun), any sudden market sell-offs were amplified. Therefore, it was suggested, investors were better off selling their holdings in May and investing again on St Leger’s Day in September.

Did the adage pay off this year?

Global stock markets, like the weather this summer, have been mixed. UK equities, for example have disappointed.

The IA UK Smaller Companies sector fared worse, with the average fund losing -3.3%*. It was followed by IA UK Equity Income (-2.33%*), IA UK All Companies (-1.1%*) and IA UK Direct Property (-0.2%*). They were the only four sectors in the Investment Association universe to be in negative territory.

It’s important to remember that, while UK stocks disappointed in 2019, looking back over the past 30 years or so, the UK stock market (as measured by the FTSE All Share Index) has produced positive returns in the majority of cases (20 out of 32 years)**.

And, as Fidelity pointed out recently, one further problem with the adage is that investment and divestment, according to the ‘Sell in May’ adage, wouldn’t have protected investors from the unforeseen shocks of the past. Buying back on St Leger’s Day would have still left investors exposed to the market crash in October 1987; the onset of the dotcom collapse in December 1999; and sharp falls as the global financial crisis got under way in September 2008.

Bonds, gold and active management shine

The other 18 sectors in the Investment Association universe, were in positive territory, with bonds doing particularly well. The best performing sector was IA Global Emerging Markets Bond, which was up some 9.1%*, followed by IA UK Gilts (8.2%*) and IA UK Index Linked Gilts (7.5%*).

And what the headline data hides, is the fact that gold funds did fantastically well this summer. Most of these funds sit in the IA Specialist sector, along with all sorts of other vehicles, so get ‘hidden’. But when the data is analysed in more depth, nine of the top ten performing funds overall between 1 May and 9 September 2019, where invested in gold – including Elite Rated Merian Gold & Silver, which returned a huge 40.3%*.

The data also hides the fact that good active management can also shine in more difficult markets. The best performing Elite Rated UK Equity fund over the period was LF Lindsell Train UK Equity, which was up 8.7%, followed by TB Evenlode Income (7.4%) and MI Chelverton UK Equity Growth (2.33%).

Top five Elite Rated funds over the summer*

FundPercentage return 1 May 2019 to 9 Sept 2019*
Merian Gold & Silver40.3%
Lazard US Equity Concentrated13.95%
Polar Capital Global Insurance13.2%
First State Global Listed Infrastructure12.1%
Smith & Williamson Artificial Intelligence11.2%

Top five Elite Rated UK Equity funds over the summer*

FundPercentage return 1 May 2019 to 9 Sept 2019*
LF Lindsell Train UK Equity8.7%
TB Evenlode Income7.4%
MI Chelverton UK Equity Growth2.3%
Threadneedle UK Equity Income2.2%
Artemis Income2.1%


*Source: FE Analytics, total returns in sterling, 1 May 2019 to 9 September 2019
**Source: Fidelity and FE Analytics, total returns in sterling.

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.