Investments  

Tech and smaller companies top performance charts

Tech and smaller companies top performance charts

Riskier asset classes dominated the performance charts in April, as investors responded to positive economic data and lower interest rate expectations. 

Data from FE shows the Investment Association (IA) Tech and Telecoms sector was the top performing sector in the IA universe during April returning 6 per cent, while the UK smaller companies sector returned 5.4 per cent, and the US smaller companies sector returned 4.73 per cent.

The AIC best performing investment trust sector was Small Media, Communications and Technology, which returned 8 per cent.

Ben Yearsley, director at advice firm Shore Financial Planning, said: "Risk assets were definitely in vogue in April with some strong gains recorded across many global markets.

"Despite our inept politicians, the UK stock market had a decent month, with smaller companies doing especially well.

"April’s strong return for small cap stocks continues the bounce back seen in the first quarter of 2019; admittedly after an horrific end to 2018.

"Global equity markets also seem reasonably sanguine with unexpectedly good US GDP numbers last month and slightly better than expected Chinese figures too."

Figures released during April showed US GDP grew by 3.2 per cent in the first three months of 2019, considerably ahead of expectations.

That, combined with the decision of the US Federal Reserve to keep interest rates at the present low level boosted risk assets, because lower interest rates mean the returns available from lower risk assets, such as cash, are much lower, enticing investors towards riskier assets.

The FTSE 100 returned 1.79 per cent in April, while the best performing sector was the IA Euro Stoxx index of European shares, which returned 3.9 per cent.

Improved economic data from China boosted European shares, as many of the largest listed European companies are in the automotive or luxury goods sectors, and so reliant on Chinese demand for growth.

david.thorpe@ft.com