Investments  

The best and worst performing funds of 2020

The best and worst performing funds of 2020

The Baillie Gifford American fund was the best performing portfolio of 2020, a fund which represents the winning themes of the year — tech, the US and Baillie Gifford itself.

Data from FE Analytics showed the fund returned 122 per cent from January 1 to December 31 last year, bagging the top spot in the Investment Association universe.

It was closely followed by Morgan Stanley’s US Growth fund, which provided a 110 per cent return, and the 98 per cent returned by the LF Access Long Term Global Growth portfolio.

Other portfolios in Baillie Gifford’s range completed the top five performers, with its Long Term Global Growth (96 per cent) and its Positive Change (80 per cent) featuring among the best funds.

Top 10 funds of 2020Return (%)
Baillie Gifford American121.84
Morgan Stanley US Growth110.43
LF Access Long Term Global Growth97.7
Baillie Gifford Long Term Global Growth95.62
Baillie Gifford Positive Change80.08
Guinness Sustainable Energy79.29
Premier Miton UK Smaller Companies77.33
Baillie Gifford Global Discovery76.8
MFM Junior Gold72.47
Matthews China Smaller Companies72.22

Technology companies saw their share prices soar last year as the pandemic forced swathes of workers to set up home offices and families and friends to catch up over video.

As the majority of such technology ‘growth’ firms are based in the US, US-centred funds performed particularly well amid the pandemic.

Ben Yearsley, investment consultant at Fairview Investing, said: “It won’t surprise too many to hear that the Technology & Telecoms sector was the top performing in 2020. 

“Lockdown winners, working from home, being entertained at home, anything linked into spending your entire life at home probably had a good year.”

But it was not all about the US. UK smaller companies, gold and China all appeared in the top 10 alongside two sustainable funds.

Looking more widely, Asia dominated the best performing sectors of 2020.

Top 5 sectors of 2020Return (%)
Technology & Telecoms44.52
China/Greater China33.43
Asia Pacific inc Japan27.21
North American Smaller Companies23.74
Asia Pacific ex Japan20.02

China’s market has been particularly resilient to the coronavirus crisis, returning 33 per cent this year, while both Asia Pacific sectors appeared in the top five.

Mr Yearsley said: “Asia generally has had a good crisis with much lower cases of Covid-19 than many Western countries and, of course, starting with much lower levels of debt.

“The slight surprise was that despite the US market hitting new highs and US companies dominating, the US fund sector was off the pace. Does this indicate how only a narrow set of companies had driven the US market in 2020?”

At the foot of the sector table was the UK, accounting for four of the five worst performing sectors and only relieved of the full house by the IA Property sector, which itself is overweight in the UK.

Hit by the perfect storm of a looming Brexit, a dividend drought and the country’s poor handling of the coronavirus crisis, the UK struggled to recoup its initial March losses last year.

The FTSE 100 recorded the worst performance in a decade, falling nearly 12 per cent over the year, while the MSCI World index rose 13 per cent, the S&P 500 gained 18 per cent and even the Euro STOXX ended on a positive figure (0.82 per cent).

Bottom 5 sectors of 2020Return (%)
UK Equity Income-10.66
UK Equity & Bond Income-8.26
Property Other-7.29
UK All Companies-5.99
UK Direct Property-3.59

Mr Yearsley said: “It is no surprise to see the UK Equity Income sector propping up the universe. 

“It’s been a truly dire year, however with many companies returning to the dividend roster 2021 should see fortunes reversed.”