Morningstar
RecommendedMorningstar AwardsWhats New IconETFs Whats New IconIncome Week Whats New IconThematic Investing Whats New IconSign Up to Our Newsletters Open Window Icon
Fund Research & Insights

November's Best- And Worst-Performing Funds

Bond and US equity funds bounce while European equities drop as Omicron makes its presence known across markets

Sunniva Kolostyak 1 December, 2021 | 3:36PM
Facebook Twitter LinkedIn
Font-Size

People forming upward arrow

November was another month where the list of best and worst performing funds looked dramatically different from previous months.

Last month, we stated that volatility completely flipped the table. With soaring cases and a new Covid-19 variant, November followed in the footsteps of October, and Morningstar data shows the trend.

At the top of the performance list we have two Schroder funds: ISF Taiwanese Equity, with a 7.64% return, and ISF China with 7.52%. However, it is bond funds and US equity that complete most of our top 10 list. Bonds have struggled to add value in the past months but as equities took a hit, the category remained stable.

Best Performing Funds in November

Two global inflation-linked bond funds performed particularly well: PIMCO GIS Global Real Return (returning 6.11%) and Schroder ISF Global Inflation-Linked Bond (returning 6.08%). Several of the funds that just missed out on our top 10 are either UK inflation bonds or US government bonds funds too. But the category goes beyond that too: a large part of all bond funds feature in the top 200 performing funds of November. According to Shore Financial Planning, the UK and US ten year yields finished at 0.81% and 1.46% respectively.

Inflation is at the forefront of policy makers' minds, and, as further restrictions loom to fight the spread of the Omricron strain, there are real concerns inflation could rise further still. During his Senate testimony yesterday, Federal Reserve Chair Jay Powell addressed inflation concerns, admitting that the forecasting community had been too optimistic.

Of this situation, Nikolaj Schmidt, economist at T. Rowe Price, says:

“The problem in the forecasting process has been related to the difficulties in understanding a very unusual, pandemic-related, distortion to the supply side of the economy.”

He adds that we can expect volatility on the back of Powell’s stance.

Four US large-cap blend funds were among the month’s strongest as well. They all returned between 5.4-6%, but have all also had annual returns between 25-28%.

Worst Performing Funds in November

The weakest funds this month were the ones with a European--and particularly eastern European--focus. JPM Russia and BNP Paribas Russia have returned -7.55% and -6.49% respectively (although both are up 17-19% this year), and two more emerging Europe funds had similar returns. UK equity income fund ASI UK Income also made the list, being down 5.44%. However, the bottom performer this month is Baillie Gifford's Global Discovery, which is down 9.11%.

Shore's investment director Ben Yearsley speculates that the lower returns from Russia and emerging Europe could be the result of the sharp oil price fall, but also increased tension between Russia and Ukraine.

Overall, he says markets have reacted in the manner expected in terms of Covid-19, punishing travel and consumer related stocks, “but the chance of another full lockdown appears remote, hence why price falls have been limited to a few percent overall rather than the widespread double-digit declines of March 2020."

He adds: "On the positive side, companies are on the whole better capitalised and better prepared to cope with the unexpected now. The redeeming quality for many portfolios last month would have been the fall in sterling, boosting the value of overseas investments.

"Whilst I can’t get excited about the outlook for bonds generally, yet again last month they proved their worth in diversification terms rising whilst all about there were falls. Whether we have a Santa rally and a positive start to 2022 will largely depend on Omicron and whether vaccines are effective."

TAGS

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.

Facebook Twitter LinkedIn
Font-Size

About Author

Sunniva Kolostyak

Sunniva Kolostyak  is data journalist for Morningstar.co.uk

© Copyright 2024 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Modern Slavery Statement        Cookie Settings        Disclosures

The Morningstar Star Rating for Stocks is assigned based on an analyst's estimate of a stocks fair value. It is projection/opinion and not a statement of fact. Morningstar assigns star ratings based on an analyst’s estimate of a stock's fair value. Four components drive the Star Rating: (1) our assessment of the firm’s economic moat, (2) our estimate of the stock’s fair value, (3) our uncertainty around that fair value estimate and (4) the current market price. This process culminates in a single-point star rating that is updated daily. A 5-star represents a belief that the stock is a good value at its current price; a 1-star stock isn't. If our base-case assumptions are true the market price will converge on our fair value estimate over time, generally within three years. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Morningstar Star Rating for Stocks, please visit here

Quantitative Fair Value Estimate represents Morningstar’s estimate of the per share dollar amount that a company’s equity is worth today. The Quantitative Fair Value Estimate is based on a statistical model derived from the Fair Value Estimate Morningstar’s equity analysts assign to companies which includes a financial forecast of the company. The Quantitative Fair Value Estimate is calculated daily. It is a projection/opinion and not a statement of fact. Investments in securities are subject to market and other risks. Past performance of a security may or may not be sustained in future and is no indication of future performance. For detail information about the Quantiative Fair Value Estimate, please visit here

The Morningstar Medalist Rating is the summary expression of Morningstar’s forward-looking analysis of investment strategies as offered via specific vehicles using a rating scale of Gold, Silver, Bronze, Neutral, and Negative. The Medalist Ratings indicate which investments Morningstar believes are likely to outperform a relevant index or peer group average on a risk-adjusted basis over time. Investment products are evaluated on three key pillars (People, Parent, and Process) which, when coupled with a fee assessment, forms the basis for Morningstar’s conviction in those products’ investment merits and determines the Medalist Rating they’re assigned. Pillar ratings take the form of Low, Below Average, Average, Above Average, and High. Pillars may be evaluated via an analyst’s qualitative assessment (either directly to a vehicle the analyst covers or indirectly when the pillar ratings of a covered vehicle are mapped to a related uncovered vehicle) or using algorithmic techniques. Vehicles are sorted by their expected performance into rating groups defined by their Morningstar Category and their active or passive status. When analysts directly cover a vehicle, they assign the three pillar ratings based on their qualitative assessment, subject to the oversight of the Analyst Rating Committee, and monitor and reevaluate them at least every 14 months. When the vehicles are covered either indirectly by analysts or by algorithm, the ratings are assigned monthly. For more detailed information about these ratings, including their methodology, please go to here

The Morningstar Medalist Ratings are not statements of fact, nor are they credit or risk ratings. The Morningstar Medalist Rating (i) should not be used as the sole basis in evaluating an investment product, (ii) involves unknown risks and uncertainties which may cause expectations not to occur or to differ significantly from what was expected, (iii) are not guaranteed to be based on complete or accurate assumptions or models when determined algorithmically, (iv) involve the risk that the return target will not be met due to such things as unforeseen changes in changes in management, technology, economic development, interest rate development, operating and/or material costs, competitive pressure, supervisory law, exchange rate, tax rates, exchange rate changes, and/or changes in political and social conditions, and (v) should not be considered an offer or solicitation to buy or sell the investment product. A change in the fundamental factors underlying the Morningstar Medalist Rating can mean that the rating is subsequently no longer accurate.

For information on the historical Morningstar Medalist Rating for any managed investment Morningstar covers, please contact your local Morningstar office.

For more detailed information about conflicts of interest, including EU MAR disclosures, please see the “Morningstar Medalist Rating Analyst Conflict of Interest & Other Disclosures for EMEA”here

Select Your Site Edition To make sure the site is relevant to you, we need to know if you’re an individual investor or a financial professional.