Which funds are on the naughty and nice lists this year?

Father Christmas, like the rest of us, is obviously very busy with last minute preparations - a 'Santa Rally' this December is yet to be seen. The adage, which suggests stocks markets generally rise in the build up to Christmas, as people are in better moods and more positive, is either late or not going to happen this year: the FTSE 100 is down 2.89%* since the start of December and the S&P 500 has fallen by 4.56%*.
Asset classes around the world have, overall, disappointed in 2018. Of the 37 different sectors for funds only a handful have made any profits: technology & telecommunications (7.5%**), North American and North American Smaller Companies (5.6%** and 3.7**), property (up to 4.3%** depending on whether it's direct or 'other'), UK gilts (1.24%** for those linked to inflation and 0.28%** for those not linked) and cash (0.4%**). Every other sector is in negative territory.

And, as AXA IM's Mark Tinker pointed out recently, “everybody's pre-Christmas drinks party story from 2017, Bitcoin, is down around 88%*** from the date they launched the Bitcoin future on 17 December 2017."

So, with Christmas fast approaching and the New Year nearly upon us, we decided to take a closer look at which funds are on the naughty and nice lists for 2018.

Fund naughty and nice lists

Number one on the nice list is Baillie Gifford American with returns of 26%** this year. It is one of four US equity funds in the top 10 performers of 2018. Also making a good showing are technology funds, with Neptune Global Technology , Polar Capital Global Technology and GAM Star Technology making it onto the list. The healthcare sector has also done well, with Polar Capital Healthcare Opportunities in second place, returning 21.78%** and Fidelity Global Healthcare in ninth.

The naughty list is a bit of a mixed bag. The worst performer of the year is Jupiter India fund, which has lost 25.1%** of its value. Indian equities have fared quite badly in 2018, on the back of a recovering oil price (India is an importer of oil) and worries over the up-coming election. While Prime Minister Modi's reforms are seen as very pro-business, they are taking time to filter through to the real economy, and investors are worried that he may not do as well the next time the country goes to the polls.

In second place is HC Charteris Gold & Precious Metals, which fell 24.45%**. Despite nervousness in the second half of the year, investors seem to have turned to cash and government bonds, rather than gold equities, as 'safe havens'. This, coupled with the fact that gold is getting harder to mine, putting pressure on company profits, and that company management hasn't always allocated capital in the best way, means gold equities have underperformed.

Three European funds also made the naughty list, along with three single country funds and an emerging market fund.

Looking ahead to 2019, we think markets could continue to be volatile. Read more about our outlook here.

Nice list**:

Position Fund name Percentage returns

Baillie Gifford American


Polar Capital Healthcare Opportunities


Neptune Global Technology


T. Rowe Price US Large Cap Growth Equity


T. Rowe Price US Blue Chip Equity


Polar Capital Global Technology


Baillie Gifford Global Discovery


Artemis US Smaller Companies


Fidelity Global Health Care


GAM Star Technology


Naughty list**:

Position Fund name Percentage returns

Jupiter India


HC Charteris Gold & Precious Metals


L&G UK Alpha Trust


Merian Europe (Ex UK) Smaller Companies


M&G Pan European Select Smaller Companies


Neptune European Opportunities


Merian Gold & Silver


Jupiter Global Emerging Markets


New Capital China Equity


Barings German Growth Trust


*Source: FE Analytics, total returns in sterling, 1 December 2018 to 10 December 2018.

**Source: FE Analytics, main share classes, total returns in sterling from 1 January 2018 to 10 December 2018, all funds available to purchase via the Chelsea FundStore.

***Source: AXA IM, 30 November 2018

Published on 10/12/2018