Best and Worst Performing Funds in March

Japanese funds and global bonds managed to post positive returns in the market sell-off, while UK equity funds suffered as the FTSE 100 fell 

03/04/2020 14:12:00

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While March was a largely terrible month for global stock markets, some funds still managed to post positive returns.

March was “was one of the most extraordinary months ever,” says Ben Yearsley, director at Shore Financial Planning. He adds: “The Great Financial Crisis seems tame by comparison. The collapse in equity prices has brought in one of the quickest bear markets in history.”

Indeed, against that backdrop the fact that any funds managed to stay in the black was surprising. Among the top 10 funds with a Morningstar Analyst Rating, Japanese funds are the stand out performers.

Four of the top performers are focused on Japan, with Bronze-Rated JPMorgan Japan leading the pack with a return of 4.2%, followed closely by its cousin the JPM Japan Equity fund, up 3.4%.

The Japanese stock market - the Topix - saw much smaller falls in recent weeks, when we compare it with the falls endured by the likes of the FTSE 100 and the S&P 500, which suffered their greatest drawdowns in decades. The Topix is down around 11% over the past month, while the UK and US markets are down closer to 20%. 

Furthermore, the pound has fallen around 3% against the Japanese Yen, which has the effect of boosting returns made in Japan when they are converted back into sterling. 

Fund Rating  Morningstar Category Return (%)
JPM Japan Bronze EAA Fund Japan Large-Cap Equity 4.16
LF Ruffer Total Return Bronze EAA Fund GBP Moderate Allocation 3.63
BNY Mellon Global Bond Neutral EAA Fund Global Bond 3.38
JPM Japan Equity Bronze EAA Fund Japan Large-Cap Equity 3.36
BNY Mellon International Bond Neutral EAA Fund Global Bond 3.02
Allianz Gilt Yield Bronze EAA Fund GBP Government Bond 2
GAM Star Japan Leaders Bronze EAA Fund Japan Large-Cap Equity 0.25
Janus Henderson UK Absolute Return Neutral EAA Fund Alt - Long/Short Equity - UK -0.6
Templeton Global Bond Silver EAA Fund Global Flexible Bond -0.78
ASI Japanese Equity Bronze EAA Fund Japan Large-Cap Equity -0.96

Many investors would expect fixed income assets to hold up well in a stock market sell-off - historically these assets tend to behave in an opposite way to equities. But concerns about a recession and companies falling into administration has pushed prices down on many corporate bonds.

Still, three Global Bond funds make it into the top performers list for March. The Neutral-Rated BNY Mellon Global Bond returned 3.4% over the month and the Silver-Rated Templeton Global Bond fund is down 0.8%.

As the UK government has unleashed an unprecendented level of fiscal and monetary stimulus with the intent of offsetting the slowdown of the global economy, Allianz Gilt Yield also finds itself in the list of top performers. March saw the Bank of England slash interest rates to all-time low of 0.1%, while the US Federal Reserve has announced an initial $2 trillion of spending, plus unlimited quantitative easing by the Federal Reserve.

Neutral-Rated Janus Henderson UK Absolute Return is the only find of its type to make it into the list, down 0.6% in the month. These funds are able to invest in various assets and derivatives with the aim of protecting investors' capital and delivering a positive return regardless of the environment. 

Yearsley says: “There were some bright spots last month, but they were few and far between. From an investment perspective, sitting tight is likely the best strategy if your key assumption is for the spread of coronavirus to be brought under control in a reasonably short space of time, as has been the case in China. Many fund managers I have spoken to in the past week say there has been a decent pickup in economic activity in China as the economy re-starts and workers return to offices and factories.”

Global Equities Plunge

While the attention of many investors would have been on the markets closest to home, emerging markets saw some of the biggest losses in March. Neutral-Rated BGF Latin American plunged 32% in the month, its export-led economy hurt by a collapse in the oil price and the prospect of countries going into lockdown. Silver Rated Franklin India and Fidelity India Focus were both down more than 24% after concerns about the late response of Prime Minister Modi to the coronavirus. 

But the falls were not limited to the emerging markets; half of the worst performing rated funds are UK-focused products. Small and mid-cap offerings as well as value-focused recovery and special situations funds have all suffered as concerns mount about the long-term effect of covid-19 on the economy, even despite help from the government.

Fund Rating  Morningstar Category Return (%)
BGF Latin American Neutral EAA Fund Latin America Equity -32.19
Artemis UK Smaller Companies Silver EAA Fund UK Small-Cap Equity -29.13
Investec UK Special Situations  Silver EAA Fund UK Flex-Cap Equity -28.78
Merian UK Mid Cap  Bronze EAA Fund UK Mid-Cap Equity -27.49
M&G Recovery Neutral EAA Fund UK Flex-Cap Equity -26.36
Franklin India Bronze EAA Fund India Equity -25.81
JOHCM UK Equity income  Silver EAA Fund UK Equity Income -25.32
Fidelity India Focus Neutral EAA Fund India Equity -24.21
Templeton Em Markets Smaller Companies  Neutral EAA Fund Global Emerging Markets Small/Mid-Cap Equity -23.54
Fidelity Special Situations Silver EAA Fund UK Flex-Cap Equity -23.36

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