China Funds Dominate a Weak June

Most funds post negative returns in June but China funds make up the top 10 best performing funds last month

Sunniva Kolostyak 4 July, 2022 | 3:21PM
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 Great Wall of China

June completely flipped the performance table for funds, with China on top last month after a torrid year. Energy and natural resources have been the categories that have thrived in the current economic climate and they’ve topped the charts all year, often with double-digit growth. But that changed in June.

China funds returned to the top of the charts after months of looking almost uninvestable to some. The Morningstar China index began a slow climb around mid-May and is now up more than 10% in GBP over the past quarter.

The top performing fund in June was FFSA China A Shares. The Bronze-rated fund returned 13.95% in June and was the first of four China A-share funds topping the charts, with the rest all up around 12% in June. All four funds in the category have managed to grow by about 10% in the past three months.

The next six funds were all China or Greater China equity funds that all saw returns around the 10% mark.

We have to look beyond the top 10 for funds from any other categories. AQR Managed Futures, a systematic trend fund, was the 11th best performer with a gain of 9.18%. It also outshone all the top 10 funds when comparing second quarter numbers – it returned 19.73% in three months.

Two thematic funds investing in biotechnology (Candriam Equities L Biotechnology and Franklin Biotechnology Discovery) were also just shy of making it to the top 10 with returns of around 7%. The quarterly returns are however slightly less impressive. The two funds were down 0.05% and 4.05% respectively.

It is worth noting that only 102 funds of our almost 800-fund dataset made positive returns in June. 

The worst performer, JP Morgan Global Natural Resources, shed 15.21% in Jine, and its sibling JP Morgan Natural Resources was down 13.31%. In Q2, both funds returned a negative 8-10%.

Latin America funds were another category that didn't do well – unsurprising as the makeup of the Latam index is leaning heavily on natural resources. These funds had a strong start to 2022, however, but have faded recently.

Other than that, one Korea fund – JPM Korea Equity – also had a tough month. As in other countries, recession fears are dampening market sentiment and the country’s central bank is expected to increase interest rate for the sixth time this year.

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

Sunniva Kolostyak  is data journalist for Morningstar.co.uk