Best performing funds this summer
St Leger Day, this year falling on the 14 September, marks both the end of the summer sporting so...
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*.
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%*).
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.
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