Best and Worst Funds in October

Chinese funds topped the performance tables in October while the prospects of another lockdown has weighed heavy on European and UK funds

Annalisa Esposito 2 November, 2020 | 12:53AM
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Top perfomers

The prospects of a national lockdown has weighed heavy on European funds, but things looks brighter in China. Some six of the 10 top performing funds in October are China-focused, with the rest of the list dominated by emerging markets funds. 

As China continues on its upward trajectory from the depths of Covid-19 pandemic, the country's exports were up 9.9% year on year in September and the economy grew 4.9% in the third quarter of the year. 

Top Performing Funds in October

We have looked at the performance of funds rated by Morningstar analysts; data from Morningstar Direct shows that investors enjoyed returns of up to 7.7% last month. Ben Yearsley, director at Shore Financial Planning, points out that China was first in and first out of the crisis: “There was a definite split between old and new in October with China, Emerging Markets, and Asia the standout performers in a turbulent month. China has led the way many times in 2020 and will be one of the few economies to grow this year.”

Fund Morningstar Analyst Rating Morningstar Category Return (%)
Robeco Chinese Equities Neutral China Equity 7.7
JPM China Bronze China Equity 6.3
Schroder ISF China Opportunities Gold China Equity 6.0
Schroder ISF China Bronze China Equity - A Shares 5.9
Fidelity Indonesia Neutral Indonesia Equity 5.4
Schroder ISF Greater China Silver Greater China Equity 5.4
GQG Partners Em Mkts Eq Bronze Global Em Mkts Equity 5.3
Schroder ISF Emerging Asia Bronze Asia ex-Japan Equity 5.3
JPM Greater China Bronze Greater China Equity 5.0
AS Emerging Markets Equity Neutral Global Em Mkts Equity 4.9

The best performing fund in October was the Neutral-Rated Robeco Chinese Equities, which returned 7.7% in the month. Year to date, the fund has returns a hefty 47.9% , boosted by its holdings in Chinese internet giants such as Tencent (00700) and Alibaba (BABA), which occupy a signficant size of its assets (9.8% and 8.9% respectively), showing the high conviction fund manager Liying Du has in these names.

In second position is Bronze-Rated JPM China, which produced a return of 6.3%. Manager Howard Wang took the helm on the fund in 2016 and is closely assisted by Rebecca Jiang. “We are comforted to see the synergy develop between the two and believe that each of them brings their respective sector expertise to the table,” says Morningstar analyst Chloe Qu. “We have been encouraged to see an increased level of resources at the portfolio managers’ disposal.”

The other funds that have made it to the top are all emerging markets focused. These are the Bronze-Rated GQG Partners Emerging Markets Equity, Bronze-Rated Aberdeen Emerging Markets Equity, Bronze-Rated Schroder ISF Emerging Asia and Fidelity Indonesia.

Worst Performing Funds in October

At the other end of the spectrum, the worst performers list is a mixed bag of European, gold and energy funds. This is, perhaps, not surprising since that UK’s second lockdown comes hot on the heels of France, Belgium, and Germany to mention a few. “Clearly the pandemic in the developed world isn’t going away just yet,” says Yearsley. “Are investors seeing Europe as an old school value trap?”

The weakest funds in October are two German funds, the Bronze-Rated DWS Invest German Equities and Fidelity Germany, down 11.9% and 11% during the month. Biggest holdings in these funds include popular names such as German pharma large-cap five-star rated Bayer (BAYN) and German package delivery two-star rated Deutsche Post (DPW).

The Lindsell Train UK Equity fund finds itself unusually in the list of worst performers. The main detractors to the fund's performance in the month are publishing company RELX and luxury fashion retailers Burberry Group, which are down 11.5% and 12.7% over the month. RELX shares tumbled after the firm said it expected big losses in the exhibitions arm of the business this year, while Burberry is vulnerable to the impact of travel bans as a result of national lockdowns. 

The year to date has been a torrid one for energy funds so it's little surprise to see the Neutral-Rated BGF World Energy and Bronze-Rated BlackRock Gold and General among the weakest performers. BGF World Energy, in particular, is down 46.5% year to date, as with businesses in lockdown and families stuck at home, the Covid-19 pandemic has hit demand for oil and gas. 

 

Fund Morningstar Analyst Rating Morningstar Category Return (%)
JOHCM Continental European Silver Europe ex-UK Equity -7.6
Robeco S'tnable Eur Stars Eq Neutral Eur Lg-Cap Blend Equity -7.7
Schroder European  Silver Europe ex-UK Equity -7.7
BlackRock Gold and General  Bronze Precious Metals -7.8
Janus Hend Horizon Euroland Neutral Eurozone Lg-Cap Equity -7.8
LF Lindsell Train UK Equity Bronze UK Flex-Cap Equity -7.9
BGF World Energy Neutral Sector Equity Energy -8.3
Fidelity Eur Dynamic Growth Silver Eur Lg-Cap Grwth Eq -8.7
Fidelity Germany  Bronze Germany Equity -11.0
DWS Invest German Equities Bronze Germany Equity -11.9

 

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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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About Author

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