The economic disruption caused by the coronavirus pandemic has been dubbed the “The Great Lockdown” by market commentators and the International Monetary Fund (IMF).
Investors are still trying to assess how much of the damage is temporary and how much is permanent, however the IMF has said it is likely to cause the worst economic downturn since the 1929 Great Depression.
In late February, before lockdown, financial markets crashed in an unprecedented wave of selling that caused most asset classes worldwide to fall, followed by an equally unprecedented rapid bull market.
One hundred days have passed since the lockdown in the UK began on 23 March, and Trustnet has looked at 25 of the highest returning funds since this period began. Where available, the five-year return for each fund was also included.
Source: FE Analytics
Gold and precious metal funds accounted for 10 of the top-25 in the list.
The top performing fund in the list was the £23.2m MFM Junior Gold fund which has more than doubled since lockdown began, returning 114.54 per cent.
Two of the largest gold funds also made the list, with the £1.4bn BlackRock Gold & General fund run by Evy Hambro and FE fundinfo Alpha Manager Tom Holl coming in seventh.
The £1.32bn LF Ruffer Gold fund came in 15th, but has delivered a 268 per cent five-year return, the highest of all the gold-focused funds.
Investor appetite for gold this year has been largely driven by the central bank measures and fiscal spending around the world to fight the pandemic’s economic fallout.
The precious metal is favoured amongst investors for its hedging properties in the event of market downturns, and as a store of value if government spending causes currency debasement and runaway inflation.
Gold – as represented by the Bloomberg Gold Sub index below – has rallied 15.79 per cent year-to-date, in US dollar terms. However, investing in gold mining companies which produce and sell gold for profit are considered a more leveraged bet on the gold price, and as the below chart shows the FTSE Gold Mines index – a benchmark of mining companies deriving most of their revenues from mined gold – is up by 28.93 per cent so far this year.
Performance of indices year-to-date (USD)
Source: FE Analytics
Seven of the top-25 funds in the list were US equity-focused funds.
Many US technology companies have seen the adoption of their products or services accelerated by the lockdown and coronavirus pandemic.
The top performing US funds have been those which are overweight the technology companies seen to be benefiting from the growing adoption of e-commerce and cloud software.
In third place was the £4bn Baillie Gifford American fund, which delivered a 70.75 per cent return over the period and 294.67 per cent over five years, the highest of the top-25 with a long-enough track record. The fund’s top three holdings include e-commerce providers Shopify and Amazon, as well as electric vehicle and clean energy company Tesla. It is co-managed by Tom Slater, who also co-manages the Scottish Mortgage Investment Trust.
Lower down in eighth place was the £3.2bn Morgan Stanley US Growth fund, which returned 64.88 per cent over the period. Its top three holdings include Amazon and Shopify, as well as Okta, a cloud-based identity management software company.
The accelerated adoption of technology has also driven the performance of the £168m LF Miton US Smaller Companies fund, which is heavily invested into smaller US tech companies. Two of its top holdings include Everbridge, a company that sells communications services for notifications of emergencies, and Teladoc, a telemedicine and virtual healthcare company.
Of the five UK funds that made the top-25, two were UK smaller companies funds.
The £5.9m MFM Techinvest Special Situations fund, which also focuses on growth technology businesses, returned 68.92 per cent over the period.
The £53.8m LF Miton UK Smaller Companies fund run by Gervais Williams, has also made a strong comeback since the beginning of lockdown, returning 59.34 per cent over the period. The fund’s largest holding is in Avacta, a Cambridge-based biotherapeutics and reagents firm which is currently developing a potential Covid-19 therapy.
The other two UK funds that made the list were FTSE 250-focused funds, one being the £2.8bn Merian UK Mid Cap fund run by FE fundinfo Alpha Manager Richard Watts, which has over 12 per cent invested in online retailer Boohoo Group.
Some of the poorest performers since lockdown began were property strategies, many of which have been gated due to their lack of liquidity and to halt outflows, withthe £411m Aviva Inv UK Property and the £343m LF Canlife UK Property ACS funds standing out.