Feeling Contrary? Take a Bet on These Losers

Are this year's worst performers going to be next year's top trumps?

Holly Cook 19 September, 2013 | 3:25PM
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It's been a funny sort of year so far: what should have been a quiet summer month turns into a stellar July for the markets; the US government surprises by not announcing tapering of its QE programme and markets rocket. There's clearly a contrary feeling in the air. 

If you're also feeling a little contrary, you might be looking for the year's worst performers and wondering if they're going to come good. It will come as no surprise that the worst performing Morningstar fund categories in 2013 have been commodities categories.

Precious Metals

The worst of them all is Equity Sector – Precious Metals, which contains those funds that invest in companies exploring and mining precious metals. On average this sector has lost a whopping 35.6% year-to-date. The 'best' performer in that category hasn't managed to improve on those losses by much: Investec GSF Global Gold fund has still lost more than 30% in value this year.

Still, the category's collectively poor performance hasn't necessarily impaired our analysts' outlook for individual players. BlackRock Global Funds – World Gold and BlackRock Gold & General continue to boast Morningstar Analyst Ratings of Gold, meaning our team believes these funds will outperform peers going forward. 

India Equity 

The only non-commodity category among the worst performers so far in 2013 is India Equity. The Indian stock market has had a particularly turbulent year and funds providing exposure to the region have struggled protect investors from the worst of it. 

Several funds in this category carry Morningstar Analyst Ratings of Silver, but only one fund has managed to provide a positive return to investors year-to-date despite the Indian market's rollercoaster and that is Russell OpenWorld India Focus Equity, which has returned 3.2%.

Among the more consistent performers in this category are Aberdeen Global – Indian Equity and First State Indian Subcontinent—both have 5-Star ratings meaning they've beaten the category average in each of the past three years. The Aberdeen fund has lost 6.2% year-to-date and the First State fund has lost 6.7%, compared to the category average of -14.3%. 

The Flip Side

After all this talk of negative returns, you’ll no doubt be curious about the flip side of the coin. To whom does the prize for the best performing category and its best performing fund go to? The category answer is Sector Equity Biotechnology and anyone who bought shares in the Franklin Biotechnology Discovery fund at the start of the year will now be celebrating a 60.6% return. Nice work if you can get it.

Explore the best and worst performing categories for yourself here.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
abrdn Indian Equity A Acc USD233.43 USD0.27Rating
BGF World Gold A242.75 USD1.16Rating
BlackRock Gold and General A Acc1,477.38 GBP1.65Rating
Franklin Biotechnology Discv A(acc)USD41.06 USD1.02Rating
Ninety One GSF Glb Gold A Acc USD22.59 USD0.06Rating

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites

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