Gold Glitters and Financial Services Funds Flounder

Precious metal funds are finally rallying as gold prices soar, while financial institutions disappoint

Sunniva Kolostyak 4 April, 2023 | 11:33AM
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Gold bars

March turned out to be pretty eventful for global markets. Events in the banking sector have had wide-reaching effects on the economy: crypto prices are up, gold is back, and bond funds investing in Credit Suisse AT1 debt had a tough time.

As such, we round up the funds with the best and worst performance in March and take a look at what the first quarter of 2023 has had in store.

In the past month, around half of our dataset of 800 analyst-rated UK-domiciled funds saw growth. We also witnessed the return of a fan favourite in tough times: gold. BGF World Gold and BlackRock Gold and General were the two worst-performing funds in February (they both dropped around 10% that month), but in March both were up over 14%.

Best Performing Funds in March 2023

As my colleague Valerio Baselli writes today in his piece on the best- and worst-performing ETFs last month (where gold and mining accounted for the majority of the top 12 list), precious metal stocks tend to follow the direction of precious metal spot prices, usually amplifying their movements.

“The benchmark London spot gold broke through the $2,000-an-ounce level on March 20, the highest price seen in the past 12 months,” he writes.

“There is a long-standing relationship between the economic crisis and the price of gold. When there is uncertainty in the economy, investors tend to turn to gold as a safe-haven asset, which drives up its price.”

However, the majority of the list consists of inflation-linked gilt funds. The best performer among these was iShares Index Linked Gilt with a 7.91% return in March. This growth seems to have been another result of the SVB/Credit Suisse fallout as investors believe central banks might be finishing monetary tightening.

Worst Performing Funds in March 2023

After a torrid month, financial services finished last. They account for the three worst performers in March. BGF World Financials had the worst month with a negative 15.65% return.

Ben Yearsley, director at Shore Financial Planning explains: “The collapse of Silicon Valley Bank and the ‘sort of’ collapse of Credit Suisse sent a huge shot across the bows of investors, central bankers, entrepreneurs, and politicians (to name a few groups). Banking is about confidence and it’s fair to say there hasn’t been much of that over the last few weeks. Markets appear to have regained their poise, even if banking stocks haven’t fully recovered February levels.”

The rest of the bottom table is a mix spanning bonds, property and systematic trend. But it’s UK small caps that take up most of the bottom 20. FTF Martin Currie UK Small Companies had the worst return among these, with -7.83%, but six more funds in the same category were also down more than 7%.

First Quarter Performance

Moreover, Martin Currie’s fund also is the worst performer so far this year, down 9.16%. The strategy is joined by Aspect Core and GAM Star Credit Opportunities to complete the bottom three.

India funds also feature heavily in the bottom, with UTI India Dynamic losing 7.60% so far this year as the worst performer in its category. Last month, we reported that the Morningstar India index was down about 8%. It has since recovered slightly and is now down 5.44%, however.

To end on a positive note, the tech sector is showing that it is back in business. Seven of the 10 best performers belong to the technology category, and the three others are US large-cap growth funds. The returns range from 15%-21%, with T. Rowe Price’s Global Tech achieving the strongest return.

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Sunniva Kolostyak

Sunniva Kolostyak  is data journalist for

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