2nd January 2014
In a year which saw the economic recovery gather further momentum and stockmarkets hit record highs, investors in gold funds have seen the value of their investments walloped writes Philip Scott.
Over the past 12 months, bullion has endured a tumultuous time, where in April alone it suffered its biggest sell-off in more than three decades, which took some $1trillion off the value of reserves.
Overall during 2013 the precious metal witnessed its value collapse by almost 30% and funds, which invest in gold and gold mining firms have suffered even steeper falls.
According to research from broker Hargreaves Lansdown, the worst performing fund of the past year has been Junior Gold, which lost investors 66%, while the CF Ruffer Baker Steel Gold fund shed 61% and the WAY Charteris Gold Portfolio is off 54%.
The highly popular £1bn BlackRock Gold & General fund, managed by Evy Hambro lost 48% and the Smith & Williamson Global Gold & Resources and Investec Global Gold lost 45% apiece.
Richard Troue, head of VCT research at Hargreaves Lansdown, says: “Falling commodities prices and escalating production costs have contributed to the poor performance of mining and resources companies, with gold mining funds dominating the bottom performers.
“Again, valuations are starting to look attractive, but momentum remains negative. A good contrarian long-term play, but catching the falling knife requires some bravery.”
But overall as investors sought riskier assets in 2013 fixed-interest investments, or bond funds, emerged among the worst performing. The typical Global Emerging Markets Bond as listed by trade body the Investment Management Association, shed 10%, while the average UK Gilt fund was off 5% and Global Bond fund by 3%. The worst equity based sector was Global Emerging Markets where the average loss was 4%.
Troue adds: “We now see less value available in government debt, investment grade debt, high yield bonds and emerging market debt. In this environment we favour strategic bond funds where managers have more flexibility to identify attractive opportunities.”
The top performers
On the flip side the £254m AXA Framlington Biotech and £229m Legg Mason Japan Equity funds were the top performing portfolios of 2013 with each achieving a return of 64%.
From a broader perspective it was smaller companies funds leading the way over the past year, where the average UK and Japanese Smaller Companies funds achieved a 37% growth. The best fund from the former category, the River & Mercantile UK Equity Smaller Companies portfolio achieved a 60% return while Invesco Perpetual Japanese Smaller Companies delivered a robust 62% return.
Other top performers included Unicorn UK Smaller Companies up 57% and CF Miton UK Smaller Companies up 56%.
Top performing funds of 2013
|AXA Framlington Biotech||Specialist||63.65||1|
|Legg Mason Japan Equity||Japan||63.65||2|
|Legg Mason Capital Management Opportunity||North America||62.01||3|
|Invesco Perpetual Japanese Smaller Companies||Japanese Smaller Companies||61.56||4|
|River and Mercantile UK Equity Smaller Companies||UK Smaller Companies||59.62||5|
|River and Mercantile UK Equity Long Term Recovery||UK All Companies||57.59||6|
|Unicorn UK Smaller Companies||UK Smaller Companies||56.54||7|
|CF Miton UK Smaller Companies||UK Smaller Companies||56.17||8|
|Baillie Gifford Global Discovery||Global||55.76||9|
|MFM Techinvest Technology||Technology & Telecoms||55.04||10|
Bottom performing funds of 2013
|Junior Gold Ret||Specialist||-65.85||1|
|CF Ruffer Baker Steel Gold||Specialist||-60.85||2|
|WAY Charteris Gold Portfolio||Specialist||-54.23||3|
|SF T1ps Smaller Companies Gold||Specialist||-49.34||4|
|BlackRock Gold & General||Specialist||-47.88||5|
|Smith & Williamson Global Gold & Resources||Specialist||-45.38||6|
|Investec Global Gold||Specialist||-44.60||7|
|Thesis Australian Natural Resources||Specialist||-29.40||8|
|JPM Turkey Equity||Specialist||-21.48||9|
|JPM Natural Resources||Specialist||-20.00||10|
Top performing sectors in 2013
|IMA UK Smaller Companies||37.34||1|
|IMA Japanese Smaller Companies||36.69||2|
|IMA North American Smaller Companies||35.87||3|
|IMA North America||31.38||4|
|IMA European Smaller Companies||30.57||5|
|IMA Technology & Telecoms||27.69||6|
|IMA UK All Companies||26.13||7|
|IMA Europe Excluding UK||25.97||9|
|IMA Europe Including UK||25.31||10|
Bottom performing sectors in 2013
|IMA Global Emerging Markets Bond||-9.69||1|
|IMA UK Gilt||-5.28||2|
|IMA Global Emerging Markets||-4.19||3|
|IMA Global Bonds||-2.53||4|
|IMA UK Index Linked Gilt||0.02||5|
|IMA Short Term Money Market||0.07||6|
|IMA £ Corporate Bond||0.21||7|
|IMA Money Market||0.28||8|
|IMA Asia Pacific Excluding Japan||2.12||10|
Source: LIPPER 31st December 2012 to 31st December 2013