We’re now in October, the last quarter of 2023 and the home stretch of what has been a mixed year for markets. But while the last of the summer heat is about to disappear in the UK, energy funds had the strongest performance in the quarter just gone.
Thirteen funds were up by double-digits over Q3 – the strongest of all belonged to Gold-rated TB Guinness World Energy, up 19.20%. This fund was also the best performer in September, which was a key month for energy stock performance over the period as oil prices spiked. Energy funds accounted for half of the top 10 list, with the closely aligned natural resources category featured twice as gas prices in the UK rose.
India funds complete the list with three funds, the best of which was Jupiter India Select (growing 13.34%).
Half of all funds available for sale to UK investors had a positive third quarter. Category wise, it’s unsurprising to see Sector Equity Energy and India Equity do well, but another category is also close to returning double digits over the quarter – Global Frontier Markets Equity. There’s only one fund in this category, however, and that’s Bronze-rated T. Rowe Price Frontier Markets Equity. The fund returned 8.35% in Q3 and is up 9.80% this year.
The biggest seven fund categories, the top three of which are different allocation mixtures, all hover below zero for returns in the quarter. The worst performing category for the quarter was Sector Equity Alternative Energy, a group of five energy transition funds which all had a bad quarter, and a bad September. In fact, only one of these funds have had a positive year and that’s Pictet Clean Energy Transition, which is up 11.02% since January.
Meanwhile, nine bottom funds saw double-digits losses over the third quarter of 2023, the worst of which was Schroder Global Energy Transition down 14.57%. Indeed, it was found in the worst-performing category of the quarter, too, mentioned above, as were two more of the funds in the bottom 10. Sector Ecology, another climate category, occupied an additional three spots in the list – Silver-rated GMO Climate Change Investment returned negative 11.90% over the period while Bronze fund Ninety One Global Environment, the biggest of all 10, was down 10.40%.
It wasn't all about the underperformance of funds attempting to invest for the climate transition, though. Global small- and mid-cap equities also featured, as did flex-cap equities and infrastructure. Overall, the bottom 50 performers was a mixed bag of European equities, bonds, and various thematics.
Trends Continue in September
As for the third quarter, oil and Indian stocks drove returns for the best performing funds in September, and the bottom performer list was mixed.
The best performing fund in September was the previously mentioned TB Guinness World Energy, up 8.64%. Right behind it we find the third-best performer over the quarter, BGF World Energy, at 7.48%. These two funds were also the top performers in August, but this was a month of muted returns where these vehicles only returned around 3%. Like August, several of the top 10 performers in September were energy strategies, but the growth was significantly higher in the latter month.
Another persisting trend was solid performance by India funds, with four of the top 10 strategies (and Jupiter India Select won out here too with a 6.67% return). This category accounts for about 20 of the top 50 for the month.
At the bottom of the bunch, we find Baillie Gifford Global Discovery, a global small- and mid-cap fund, down 8.52%. But the list was varied category wise and included the likes of precious metals (gold had a poor month), healthcare, infrastructure, and flexible bonds and equities.
Overall, a third of all funds available to UK investors had a positive month while the rest struggled in what was a mixed month for global markets.
