World stock markets are still in bullish mood as we pass the half way point of 2019, with America’s S&P 500 hitting a record high at the end of June.
With most world markets higher than at the start of the year, gains for most passive funds are to be expected. But what are the best performing open-ended funds* in the first six months of the year? With US markets at record highs, US-focused funds are heavily featured in the top 10. Woodford Equity Income is the worst performer among open-ended funds with a Morningstar rating of Negative and above.
Baillie Gifford Worldwide Discovery tops the list with a gain of 30% in the year to date, followed by Franklin US Opportunities, Morgan Stanley US Advantage, Fidelity European Dynamic and Neptune Russian and Greater Russia.
The top five funds are respectively rated Silver, Neutral, Silver, Silver and Neutral by Morningstar analysts.
The Baillie Gifford fund launched in August last year and has a Morningstar Analyst Rating of Silver. The fund has a 63% weighting to the United States and a 32% sector weighting towards technology. Its biggest holding is FTSE 100-listed Ocado (OCDO), whose shares started the year at 810p and are now at £11.86, a gain of 46%.
Absolute return funds are well represented in the bottom five performers but one fund in particular stands out: Woodford Equity Income, which was closed to investors at the start of June, lost 12% in the first six months of the year. The next biggest faller, Bronze-rated BNY Mellon Absolute Return Equity Fund is 1.4% lower in the year to date.
Best and Worst Performing Investment Trusts
Bronze-rated JPMorgan Russia (JRS) leads the way among investment trusts with a gain of 33% so far this year. The rebound in oil prices this year has helped boost the shares of energy exporters such as the trust’s biggest holding, Lukoil. Morningstar analyst Lena Tsymbaluk, who reiterated the Bronze Rating at the start of this year, backs the long experience of manager Oleg Biryulyov, who has run the trust since November 2007.
The rebound in Chinese equities this year after a 25% fall in the market in 2018 helped push Bronze-rated JPMorgan Chinese (JMC) to the second spot, with a gain of 27% year to date
Like JPMorgan Russia, the China trust has a long-standing manager in Howard Wang, who has run the trust for 14 years. Fellow managers Shumin Huang and Emerson Yip have worked on the fund since 2006. Morningstar analysts praise the manager for sticking to his focus on growth stocks even during difficult times, such as in 2018. The trust has a long-standing overweight in consumer, healthcare and technology sectors.
Both JPMorgan Russian and China trade at sizeable discounts to their net asset value, of 13.7% and 14.3% respectively.
JPMorgan China no longer charges a performance fee, but Morningstar analysts say the ongoing charge of 1.34% is expensive when compared with peers.
A small 4% gain for Neutral-rated Schroder Japan Growth (SJG) so far this year makes it the bottom performer among Morningstar-rated funds. Silver-rated Edinburgh Investment Trust (EDIN) is the second-worst performer with a gain of 4.3%. The trust is managed by James Goldstone and Mark Barnett, whose Invesco High Income is the sixth-worst performing of open-ended funds in the year to date.
*Funds included must have a Morningstar Rating of Negative or higher
