March’s stock market volatility gave way to a much stronger April, and that gave a decent push higher for funds rated by Morningstar. Europe-focused funds feature strongly in the month’s top 10, while China funds dominate the bottom 10 after another difficult month and quarter for the country’s equities.
The month’s top performers were a mix of European, financial, UK equity income, and India-focused funds.
The Standout
Comgest Growth European Smaller Companies was the standout fund in April under Morningstar coverage, with a gain of 5.58%. This Silver-rated fund was also 13.78% higher in the first four months of the year, putting it just outside the top 10 in terms of performers.
Indeed, it is just pipped to the top 10 by Comgest Growth Europe, a Gold-rated fund that posted a gain of 1.06% in April and 13.78% in the year to date.
Not far behind in April was another European fund with a Silver Rating, the AXA World Funds – Europe Real Estate Securities, which gained 5.23% last month. But over four months the fund is up just 1.28%, and follows a near 33% loss in 2022 amid a tough year for commercial property. Other European funds in the top 10 include Bronze-rated Fidelity European Growth, which also outperformed wider European indices.
UK markets had another solid month after the March wobble. So it’s not surprising to see three UK funds in the top 10, CT UK Equity Income (Bronze), Jupiter UK Alpha (Silver) and JOHCM UK Dynamic (Silver), which made monthly returns of 4.10%, 3.74% and 3.52%, respectively.
These funds represent three different categories: equity income of course, UK large-cap and UK flex-cap. It’s worth noting that the FTSE 100 gained around 3.5% in February and the FTSE All Share roughly 1.5%. The top three holdings of the CT UK Equity Income fund are Imperial Brands, RS Group and Rentokil Initial, Jupiter UK Alpha holds AstraZeneca, Drax and Glencore, while JOHCM UK Dynamic owns HSBC, ConvaTec and GSK as its biggets holdings.
A couple of top 10 funds may be unfamiliar to regular readers of this series: Aspect Core UCITS, which has a Bronze Rating, is a relatively new fund which aims to take advantage of systematic trends. It posted an impressive 28.8% return in a volatile 2022, and was up 3.61% in April (although it’s down 2.37 in the year to date).
Morningstar fund analyst Francesco Paganelli says:
“Aspect Core Trend is a systematic managed-futures program aiming to profit from market trends, either up or down, across multiple asset classes and markets…[the fund] benefits from a team committed to top-quality research and a firm with decades-long experience in trend-following strategies. The fund’s relatively low fees are a further attraction”.
Macquarie Valueinvest makes it into ninth place with a gain of 3.60%. The fund has a 20-year plus track record and also earns a Bronze Rating. Its biggest geographical weighting is towards the Eurozone (36%), then the US (24.90%) and Europe – ex-Euro (20%). Top holdings include Nestle, Koninklijke Ahold Delhaize and SAP.
“The team’s experience and cautious character, combined with a prudent and disciplined approach make Macquarie ValueInvest Lux Global a good choice for conservative equity investors,” says Morningstar analyst Natalia Wolfstetter.
In terms of the month’s laggards, seven funds have a China focus, including offerings from JPM, Schroders, Fidelity, Invesco and Allianz. China equities had a bounce late last year on the re-opening, but have since faded. The Morningstar China index is down 12% over the last three months in US dollar terms, following a fall of 20% in 2022.
Silver-rated JPM China fell nearly 9% in April, making it a loss of 10.79% for the first four months of the year. Four Gold-rated funds are in the month’s bottom 10, which shows that even the best funds can have a bad month.
Among these are two Morgan Stanley offerings, MS US Growth, which fell 55% last year, and MS US Advantage, which dropped 48% in 2022. It’s worth noting that these were star performers in 2020: MS US Growth doubled in value that year, making it the best performing fund under Morningstar coverage that year.
Year-to-Date Performance Figures
We’re already a third of the way through the year, so it’s useful to look at performance in the year so far. At the top end of the scale, there are some hefty gains for some technology and US-focused funds.
T. Rowe Price Global Tech leads the pack with a 17.43% gain, which comes after a 51% fall in 2022 after the sector fell drastically out of favour. JPM China was the worst performer in the first four months of the year. There have been some management changes at the fund but our analysts keep faith in the strategy.
“Although the strategy faced stylistic headwinds in 2021 and 2022 with an environment unfavorable to growth stocks, its long-term track record remains strong,” they say.
“JPM China benefits from a solid investment management team, a well-resourced and expanding supporting cast, and a proven investment process […]. We also continue to recognise JPMorgan’s best-in-class Greater China team, which has been very stable over the past years and sports one of the broadest coverages among the offshore China equity teams that we rate.”
A Reminder of the Methodology
We’re looking at the 797 funds with a Rating of Negative and above and that are available for sale in the UK. As of 2 May, what used to be known as the Morningstar Analyst Rating and Morningstar Quantitative Rating are to merge into one rating: the Morningstar Medalist Rating. You can read more about these changes here. Almost all funds had reported April data by the beginning of May, and 413 had posted gains in the month.
SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk
