FE fundinfo reveals top performing funds and sectors for first half of 2024

Commenting on this, FE fundinfo deputy chief investment officer, Charles Younes, said: “The first half of 2024 was challenging for Sterling Strategic Bond managers, particularly for those anticipating the Federal Reserve to begin its easing cycle this year. Positive inflation surprises led to a shift in bond market expectations, reducing the anticipated number of Fed rate cuts from 3-4 to barely 1. While the Bank of England adopted a more dovish tone, no rate cuts are expected before August.

“As a result, top performers were funds with low interest rate sensitivity (low duration) but high levels of credit risk, as there were no signs of recession or widespread corporate bankruptcies.”

IA Global Equity

The global equity markets experienced a strong rally driven by AI stocks, despite uneven bond markets. Xtrackers MSCI World Momentum topped the list as the highest performing fund (27.12%).

iShares Edge MSCI World Momentum came in second place, yielding a 27.02% return. It was followed by Axiom Concentrated Global Growth (26.02%), GQG Partners Global Equity (23.63%) and Polar Capital Artificial Intelligence (23.32%).

Younes added: “Funds with exposure to Nvidia, which at one point reached the largest market capitalisation, dominated the performance charts. The so-called ‘magnificent 7′ stocks became the primary focus of fund performance, with stock pickers’ main decision to make whether to hold (or not) these famous names.”

IA Global Emerging Markets

The Global Emerging Markets universe witnessed impressive performances in the first half of the year, with country allocation proving to be a crucial factor. Indian equities emerged as one of the strongest markets – defying domestic political uncertainty with the ruling BJP party not achieving an absolute majority in the 2024 Election.

Leading the pack for this period was the GQG Partners Emerging Markets Equity fund, which delivered an outstanding return of 17.74%. This fund’s success can be attributed to its significant allocation to the Indian growth story, as well as its position in Nvidia, demonstrating the importance of both geographic and sector allocation in emerging markets.

IA UK All Companies

In the first half of 2024, topping the list in the UK All Companies universe was JOHCM UK, delivering an outstanding return of 19.99%. As an active stock picker fund, it benefited from a market where no particular investment style was in favour.

Other top performing funds included Unicorn UK Growth (16.85%), Ninety One UK Special Situations (15.58%), Artemis UK Select (14.44%) and SVS Zeus Dynamic Opportunities Founder A (13.03%).

Younes further said: “The UK All Companies universe witnessed impressive performances, buoyed by the UK economy’s emergence from recession and positive economic surprises such as actual growth data being higher than anticipated. The UK equity markets stood out as one of the strongest globally during this period, with no particular investment style dominating, creating a favourable environment for skilled stock pickers.”

Best Performing Sectors 

The best-performing sector in the first half of 2024 was Technology & Technology Innovation, which showed a substantial performance of 16.76%. This sector demonstrated remarkable growth and outperformed other sectors during this timeframe, primarily driven by the ongoing AI revolution and the exceptional performance of companies like Nvidia.

Other notable performers include India/Indian Subcontinent with an impressive return of 16.35%, reflecting the strong performance of Indian equities despite some political uncertainties. North America followed with a robust performance of 12.60%, largely due to the strong performance of the S&P 500 and its tech-heavy composition.

UK Smaller Companies and Global sectors also performed well, with returns of 8.91% and 8.59% respectively, showcasing the breadth of the market rally.

On the other end of the spectrum, some sectors struggled in the first half of 2024. The EUR Government Bond sector saw a decline of -4.01%, while the UK Index Linked Gilts sector fared even worse with a -4.45% return. These poor performances can be attributed to the ongoing challenges in the bond markets related to inflation concerns and shifting interest rate expectations.

The worst-performing was Latin America, with a substantial decline of -15.39%. This stark underperformance highlights the divergence in emerging markets, with Indian equities thriving while Latin American markets struggled, likely due to political uncertainties and economic challenges in the region.

Younes concluded: “‘The first half of 2024 has showcased the resilience and adaptability of top-performing funds across various investment categories. These funds have navigated a complex market landscape, delivering impressive returns and demonstrating their ability to capitalise on emerging trends, particularly in technology and AI. The standout performance of the UK All Companies sector, driven by the country’s economic recovery, and the continued strength in Global Emerging Markets, especially India, highlight the importance of diversification and active management.

“The divergence in sector performances, from the tech-led rally to the struggles in Latin American markets, emphasizes the critical role of careful sector allocation. In this rapidly changing environment, the value of comprehensive, timely data and in-depth analysis cannot be overstated. These tools are essential for identifying emerging trends, understanding market dynamics, and making informed investment decisions.’”

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