Coronavirus  

Which funds are performing well during the crisis

There has been dispersion on the performance front during this downturn as well – with the best performer up 11 per cent (Wellington Global Total Return) and the worst performer falling 36.7 per cent (Natixis H20 Multi-Returns).

What I would say is that many of the traditional funds are living up to their billing, such as the Artemis US Absolute Return (-0.3 per cent).

Solid performers like the Janus Henderson UK Absolute Return (-3.4 per cent) and the Church House Tenax Absolute Return Strategies (-6.5 per cent) have all recorded low to medium single-digit losses during this period.

The other equity market that has held up well is China.

Despite Covid-19 originating there, the Chinese government’s way of tackling the coronavirus appears to have worked, and markets are reflecting that.

Top performers include the likes of Matthews China Small Companies (6.7 per cent) and Invesco China Equity (-6.83 per cent).

The multi-asset nature of many funds in the IA Mixed Investment sectors has also seen them hold up better than most of the market.

The Mixed Investment 0-35% Shares sector has seen the smallest average loss, as you would expect, (down 12 per cent), while the Mixed Investment 40-85% Shares sector has seen an average loss of 20.9 per cent.

However, like the Targeted Absolute Return sector, there is quite a mix of funds that can lead to dispersion of performance.

As we talked about earlier, the depreciation of sterling also goes some way to explaining why the three major UK sectors – namely UK Smaller Companies (-36.5 per cent), UK Equity Income (-35.6 per cent) and the UK All Companies (-34.9 per cent) – have been the poorest performers since markets began to sell-off.

Not only does the UK have the uncertainty of Brexit hanging over the economy, but I also wonder if we are being punished for being tardy in following some of our counterparts in closing the country down – in terms of events and introducing social distancing – in a bid to tackle the spread of the coronavirus.

Value funds are also suffering compared to those investing in quality companies.

This is because quality companies, such as Reckitt Benckiser and Unilever, are still delivering the consumer staples that everyone needs, even in this UK lockdown scenario.

What we do not need is the likes of petrol or other discretionary spends.

Value often comes with companies that are more indebted, and anything with leverage has been hit hard.

Quality businesses that have the ability to continue to have good pricing power and compound their earnings have again come out stronger, while low interest rates have also helped these bond-proxy type businesses.

That is why the likes of the TB Evenlode Income (-28.6 per cent) and Liontrust Special Situations (-29.6 per cent) have been better performers in the UK All Companies sector during the sell-off, compared to a number of value, recovery or special situations funds, many of which have seen losses in excess of 40 per cent.