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One-third of funds suffer double-digit losses in 2022 so far

11 May 2022

Trustnet finds that nine in 10 funds have made a loss this year and it’s very slim pickings when looking for those that are up more than 10%.

By Gary Jackson,

Head of editorial, FE fundinfo

The vast majority of funds in the Investment Association universe are currently posting losses over 2022 so far and a significant number of those are down by 10% or more, research by Trustnet has found.

Headwinds such as soaring inflation, interest rate hikes, fears of stagflation and the war between Russia and Ukraine have hit markets hard this year, with both stocks and bonds falling. Over 2022 to date, the MSCI AC World index has dropped 8.5% while government bonds (represented by the Bloomberg Global Treasury index) have shed 4.2%.

Against this backdrop, funds have struggled to generate strong returns and data from FE fundinfo reveals just how lacklustre 2022 is turning out to be for investors.

Our data shows that just under 90% of the 5,000 or so funds in the Investment Association universe are currently in negative territory this year. Just 10.9% have managed to turn a profit.

The spilt between negative and positive funds is pretty much the same for equity and fixed income strategies – roughly 90/10. Mixed asset funds have fared worse with around 95% losing money this year, while most of those investing in commodities are up as are 35% of property funds.

What’s more, there are some sectors where not a single fund is in the black this year, including IA China/Greater China, IA European Smaller Companies, IA Sterling Corporate Bond and IA UK Index Linked Gilts.

% of funds with double-digit losses in 2022 so far

 

Source: FE Analytics

Our research also found that one-third of Investment Association funds are presently down by 10% or more. The chart above breaks this down by Investment Association sector (red shows the percentage of each sector posting double-digit losses in 2022).

Here, equity funds have performed much worse. Around half of equity funds are sitting on a double-digit loss this year, compared with just 22.5% of fixed income funds, reflecting the higher risk of the stock market.

That said, the worst affected sector is IA UK Index Linked Gilts, where every one of its 14 members have lost more than 10%. Year-to-date losses range from 14.7% (Scottish Widows UK Index Linked Tracker) to 18.5% (AXA Sterling Index Linked Bond).

IA Technology and Technology Innovation has been the second-worst place to be after 96.8% of its funds sank into double-digit loss territory. SSGA SPDR MSCI Europe Communication Services UCITS ETF is the exception and it has made a very small positive return over the period, gaining 0.8%.

But the other 29 tech funds have come off much worse with T. Rowe Price Global Technology Equity sitting at the bottom of the table after plunging 43.5%. Herald Worldwide Technology is the ‘best’ of the sector’s loss-making funds, with a fall of 11.7%.

Tech stocks have taken the worst hit in the recent market slump. A decade of ultra-loose monetary policy sent their valuations soaring but investors are less willing to pay high prices for future earnings now interest rates are going up, sparking a move out of tech stocks and other growth names.

The IA China/Greater China sector came in third (96.6% of members down double-digits), reflecting heightened investor nervousness around the imposition of ‘zero Covid’ lockdowns on several Chinese cities.

Templeton China is the worst performer with a 26.3% loss year-to-date while Fidelity China Focus has the best result – it’s down just 0.6% at present.

Two more sectors have more than 90% of funds losing 10% or more this year: IA European Smaller Companies and IA UK Smaller Companies.

A quick look at the main sector investors tend to keep an eye on shows that 53.3% of IA Global funds have posted losses of more than 10% this year, as have 44.8% of IA UK All Companies funds, 44.2% of IA Sterling Corporate Bond funds, 22.9% of IA Mixed Investment 40-85% Shares funds and 14% of IA UK Equity Income funds.

But eight peer groups currently have no members showing double-digit losses in 2022 to date: IA EUR High Yield Bond, IA Global Government Bond, IA Global Inflation Linked Bond, IA Infrastructure, IA Latin America, IA Short Term Money Market, IA Standard Money Market and IA UK Direct Property.

% of funds with double-digit gains in 2022 so far

 

Source: FE Analytics

To end the article on a positive note, Trustnet also looked for funds that have made double-digit positive returns over 2022 so far. There were far fewer – only 1.8% of the Investment Association universe has achieved this.

The green parts of above chart show the percentage of each sector that is up 10% or more this year.

IA Latin America leads as 58.3% of its members have generated double-digit gains. Schroder ISF Latin American (up 16.8%), Barings Latin America (15%) and BlackRock GF Latin American (14.2%) are the peer group’s best performers.

Close behind is IA Commodity/Natural Resources with 57.7% of funds in double-digit territory. The best performers here reflect the surge in the price of energy commodities: iShares S&P 500 Energy Sector UCITS ETF has risen 52.1% while Xtrackers MSCI USA Energy UCITS ETF is up 41.8% and BlackRock BGF World Energy has made 49.3%.

Meanwhile, 20.8% of IA Infrastructure funds have made more than 10% this year as have 11.1% of IA Specialist members.

Things are less rosier in the IA Global sector, which the largest peer group in the Investment Association universe, as only 0.8% of its members have made double-digit positive total returns.

That’s just four funds: Schroder ISF Global Energy (up 47.8%), SSGA SPDR MSCI World Energy UCITS ETF (42.1%), iShares Agribusiness UCITS ETF (18.1%) and Kennox Strategic Value (13.5%).

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Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.