A dip in the stock market saw UK Gilt funds climb to the top of the best-performers list in March.
As the FTSE 100 continued to be dogged by uncertainty, safe haven investments saw a flurry of activity.
UK Gilt funds returned 2.3 per cent in March, making the sector the top performer for the month, according to figures from FE Trustnet compiled by Architas.
The best performing fund of the month was Baillie Gifford Active Long Gilt Plus, which returned 5 per cent over the month, and Thesis TM Sanditon UK Select, which was up 4.3 per cent. Just one fund among the top performers was not a gilt or bond fund: Aberdeen Property Share which was up 4 per cent.
Tom Becket, chief investment officer at Psigma Investment Management, said: "It’s no great surprise that gilts have outperformed in the short-term, but over the medium-term I can’t see why any investor would think lending money at a negative real rate of return is a good idea. Investors are simply not being paid enough for UK government bonds and yields will have to rise."
Also among the top performing sectors were UK Index Linked Gilts and Property, with returns of 2.2 per cent and 0.6 per cent respectively.
But, in a sign the bull run may truly be over, four of the top 10 sectors for the month posted negative returns. The Sterling High Yield and Targeted Absolute Return sectors were both down 0.6 per cent.
North America was the weakest sector for the month as fears of a trade war between the US and China cast a shadow over the region. The sector was down 5.6 per cent over the period, closely followed by Tech & Telecoms, down 5.3 per cent after concerns surrounding Facebook's use of data and President Trump's tweets about Amazon.
Adrian Lowcock, investment director at Architas, said: "Volatility is being driven by concerns over a US trade war with China, which could damage global growth, and an increased focus on the future regulation of the technology sector. Each of these has the potential to drag on and dominate markets for the foreseeable future."
T Rowe Price had three funds in the bottom-performers list – the weakest performer of the month was its US Large Cap Growth Equity fund, down 8.5 per cent. The US fund has faced a double whammy of headwinds, with almost 40 per cent of its assets in the technology sector.
The 10 worst performing funds of the month, including BlackRock World Mining, GAM Multistock Euroland Value Equity and Jupiter India Select, were all down 7.8 per cent or more.
