5 Best and Worst Performing Funds in Q3

US-focused funds continue to shoot the lights out, while India funds suffered from a rising oil price

David Brenchley 5 October, 2018 | 2:24PM
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India, Indian stock market, Indian stocks, gold price, oil price

The US stock market is up 16% over the past year, recently buoyed by President Donald Trump’s pro-business agenda, and investors in North American funds are reaping the rewards.

Of the 10 best performers in the third quarter of 2018, eight reside in the Investment Association (IA) North America sector. Of those eight, four were trackers.

Simon Edelsten, manager of the Morningstar Silver Rated Mid Wynd International Trust (MWY), currently has the largest exposure to the US he’s ever had. “It does make me slightly uncomfortable. But those are the businesses that are doing really well,” he says.

“Unfashionable though it is, from my point of view, because I care about cash flow per share, anyone who cuts corporation tax is doing my unit holders a favour because it is more money for shareholders.”

At the other end of the spectrum, funds investing in China, India and Asia more generally were the worst performers. However, it was BlackRock Gold and General that lost investors the most money over the three months to 30 September.

5 Best Performing Funds

The £600 million Silver Rated JPM US Select fund was the top performer, returning 9.6%. While the fund has many of the largest stocks in the States, both Amazon (AMZN) and Apple (AAPL) have lower weightings than peers Alphabet (GOOGL) and Microsoft (MSFT).

Fellow Silver Rated Robeco BP US Large-Cap Equities benefited from its near-20% weighting to healthcare, and a big overweight – at almost a third of the fund’s assets – to financials. The offering returned 8.8%.

Next, the only non-US fund in the top five, the Silver Rated BNY Mellon Long-Term Global Equities fund, gained 8.7% in the quarter. The fund has half of its assets in North American, with a further fifth in Europe. The top three holdings include the US-listed Mastercard (MA) and EOG Resources (EOG) and Japan’s Keyence (6861).

Following this trio were two Gold Rated passives. The HSBC American Index and Fidelity Index US both track the performance of the S&P 500 and returned 8.5% apiece in the past three months.

5 Worst Performing Funds

BlackRock Gold and General, which was recently downgraded to Silver by Morningstar analyst Fatima Khizou, continues its poor performance as miners suffer thanks to a slump in the gold price. The precious metal is down 8.6% in 2018.

As a result, the fund has lost a fifth of its value in the year-to-date and was down 13% in the quarter. Its second-largest holding, Canada-listed Agnico Eagle Mines (AEM), lost a quarter of its value in the three months.

While the gold price suffers, the oil price is buoyant. Both Brent and WTI have surged 25% in 2018 alone. While there are many countries this benefits – Russia, for example – one it does not help is India.

Other reasons for weak Indian returns, according to Adrian Lowcock, head of personal investing at Willis Owen, include widening trade tensions, a weaker currency and the Government’s questionable ability to meet its fiscal deficit targets.

The funds hit hardest were Bronze Rated Jupiter India, down 11.6%, Franklin India which lost 9.5%, and Goldman Sachs India Equity is down 8%. Jupiter India is the worst-performing Morningstar Rated fund of the year, losing 26%.

Rounding out the list, the third worst-performing fund in the quarter was the Silver Rated GAM Star China Equity, which felt the full force of further trade tariffs. It was down 11%.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Agnico Eagle Mines Ltd95.44 CAD1.86Rating
Alphabet Inc Class A176.06 USD1.08Rating
Amazon.com Inc184.70 USD0.58Rating
Apple Inc189.87 USD0.02Rating
BlackRock Gold and General D Acc1,448.16 GBP-0.43Rating
BNY Mellon Long-Term Global Eq Int W Acc3.94 GBP-0.34Rating
EOG Resources Inc129.94 USD1.58Rating
Fidelity Index US P Acc443.43 GBP-0.05Rating
Franklin India W(acc)GBP45.09 GBP0.54Rating
GAM Star China Equity Instl GBP Acc14.02 GBP0.55Rating
GS India Equity R Inc GBP47.18 GBP0.75Rating
HSBC American Index C Acc11.86 GBP-0.06Rating
JPM US Select C Net Acc10.04 GBP-0.30Rating
Jupiter India I Acc255.49 GBP1.39Rating
Keyence Corp72,880.00 JPY-0.38Rating
Mastercard Inc Class A460.27 USD0.31Rating
Microsoft Corp420.21 USD-0.19Rating
Mid Wynd International Inv Tr Ord784.00 GBX-0.51Rating
Robeco BP US Large Cap Equities F £366.88 GBP-0.32Rating

About Author

David Brenchley

David Brenchley  is a Reporter for Morningstar.co.uk

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