Top Performing Fund Categories of January

Chinese equities and the energy sector topped the tables in January, meanwhile Latin America, precious metals, and some European peripheral markets lost ground 

Valerio Baselli 9 February, 2021 | 9:23AM
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Equities had a robust fourth quarter in 2020, with Morningstar Global Markets Index NR up by 10.7% and inflows towards European-domiciled equity funds setting a historical record between October and December: €256 billion.

January, on the other hand, saw a strong start followed by a slowdown towards the end, which resulted in a flat monthly return for global markets. Nevertheless, a look at the best and worst performing Morningstar Categories reveals that overall 2020 most successful funds’ groups managed to keep the pace in the first month on 2021.

The Top Performing Categories of January 

China equity funds, in particular, continued their rally. China’s economy expanded by 2.3% in 2020, becoming the only major world economy to grow in what was a pandemic-ravaged year. In January, China’s factory activity grew in line with an ongoing economic recovery, although it was at the slowest pace in five months after new coronavirus infections prompted lockdowns in the country.

Top performing categories


Among the European cross-border funds, the TT China Focus was the best of its category, gaining 14.7% in January, followed by GAM Multistock - China Evolution Equity Fund, which returned 12.8%. JPMorgan China Fund – which holds a Morningstar Analyst Rating of Silver – had a monthly performance of +9.2%.

Concerning products investing in mainland China-based companies (A-Shares), Goldman Sachs China A-Share Equity Portfolio IC Class Shares Dist S-A topped the pack, gaining 16.7% last month. Silver-rated Schroder International Selection Fund China A IZ Accumulation EUR also had a positive ride, with a 8.8% return in January.

After the vertical collapse which took place between March and April last year, the energy market is slowly crawling towards rebalancing. If oil producers stick with their cuts and vaccinations progress, oil demand is arguably set to return to normal before this year’s end.

Brent Crude Oil increased from $51.8 to $56.4 per barrel in January (it reached pre-pandemic levels of $60 at the time of writing – February 8th). WisdomTree Gasoline (EUR) and WisdomTree Heating Oil (EUR) were among the top performers of the category, up by 10.4% and 8.3% last month, respectively.

The best performing category of 2020 earned the fourth place of the ranking in January, a sign that investors’ interest in alternative energy is far from over. The transition to renewables is not new, of course, but it has accelerated for several reasons, above all the political will to tackle climate change, which in the European Union has become a priority and shaped the Green Deal, the plan to eliminate net greenhouse gas emissions by 2050. Silver-rated RobecoSAM Smart Energy Equities Fund gained 6.7%.

Worst Performing Categories of January

Turning to the laggards, Brazilian equities stand out among the worst performers with an average loss of 6.5% in January. Brazil has been hit particularly hard by Covid-19, and its economy has suffered, contracting more than 4% last year. BNP Paribas Brazil Equity Fund shed 8%, meanwhile the tracker iShares MSCI Brazil ETF lost 7.5%.

The underperformance of the region’s largest economy dragged down the basket of funds exposed to Latin American equity markets. Amundi Latin America Equity Fund shed 7.5% and Silver-rated JPMorgan Latin America Equity Fund was down by 3.5%.

Except for Italy, equity markets of the other so-called PIGS countries (Portugal, Greece and Spain) are present among the worst performers of the month. While Portugal faced in January a rate of new Covid-19 cases reaching the highest in the world in proportion to its population, Spanish stocks suffered their biggest monthly drop since July in the wake of the return of volatility on global markets and tensions soaring over vaccine supply shortages. Fidelity Iberia Fund shed 3.9%.

Worst Performing Categories


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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Valerio Baselli

Valerio Baselli  is Senior International Editor at Morningstar.

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