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Best and Worst Performing Funds in September

UK funds dominate the top performers list in September, while gold funds have lost their lustre

Annalisa Esposito 1 October, 2019 | 1:31PM

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The H20 Allegro fund topped the best performing Morningstar-rated funds in September, returning an incredible 12.75% in the month. 

It was the second month at the top of the table for the global macro fund, which was downgraded by Morningstar analysts from Bronze to Neutral rating over concerns about its exposure to illiquid, high-risk bonds - it was also the top performer in July.

The fund, which takes long positions on the US dollar and eurozone debt, has sold off much of its exposure to illiquid assets in a bid to regain investors’ trust. It has produced stellar annualised returns of 27.3% over the past five years but this has been achieved at a “higher risk than investors could have expected”, according to Morningstar analyst Mara Dobrescu.

The 10 Best Performing Funds in September

Best funds in September

September was also a good month for Japanese and UK equity funds. For the first time in a long while, UK equity funds dominated the best performers’ table, occupying six out of the top ten spots – this was helped by a good month for sterling, which rose against dollar, yen and euro.

“Equity Income is a stalwart of many investors’ portfolios, so it is good to see the sector perform well,” says Ben Yearsley, director at Shore Financial Planning. “Many Equity Income fund managers will be overweight domestically orientated stocks, which will benefit from a Brexit deal and a sterling bounce.”

The second-best performing fund in the month was the Silver-rated JO Hambro Capital Management UK Equity Income. The £3.3 billion fund, led by the two veterans James Lown and Clive Beagles since its inception in 2004, returned 7.6%

Three Japanese funds also showed up in the table, eacj returning more than 5% – this doesn’t surprise considering the Japanese Topix index, was thstrongest developed market index in September, rising 6%, compared to a meagre 1.3% for the S&P 500.

 

The Bronze-rated GAM Star Japan Leaders has produced an impressive 18.9% return year to date. Among its top holdings: the largest chemical company in Japan Shin-Etsu Chemical and manufacturer of power tools Makita Corp, which account for 4.4% of assets each.

Other top-performing Japanese equity strategies included the Silver-rating Eastspring Investment Japan Dynamic and the Gold-rated Man GLG Japan Core Alpha Equity, both in the Morningstar Category Japan Large-Cap Equity.

Just one US fund features in the top ten this time around; the Neutral-rated Legg Mason RY US Smaller Companies, in third position. The fund, which has returned almost 20% year to date return, focuses on firms with a market capitalisation of $5 billion of less - a smaller company in US terms. Lead manager Lauren Romeo, who has 25 years of industry experience, seeks out small-cap companies with healthy balance sheets, strong free cash flows, and high return on capital. She aims to buy companies trading at what she estimates to be a 30%-50% discount to their actual worth.

Gold Struggle

However, the saying “all good things come to an end” comes true. After three consecutive months of topping the tables, gold funds fell from grace into the table of bottom performers.

Worst Funds in September

The Silver-rated Baillie Gifford Global Discovery fund is the worst performer, losing 7.3% in the month and followed by followed by the Bronze-rated BlacRock Gold and General and the Bronze-rated GLobal World Gold, were down 7.1% and 6.8% respectively.

Global funds, including US funds such as Franklin US Opportunities - one of three Franklin funds in the list of weakest performers - also struggled in a month where the MSCI World index edged up just 2%. 

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.

About Author

Annalisa Esposito  is a data journalist for Morningstar.co.uk

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