Funds were impacted by a range of factors in 2022, including war, inflation, the pound, and the gilt market. So let’s have a look at how these factors affected UK fund performance.
As we noted after the markets closed for the year, the FTSE 100 ended the year less than 100 points up from open at the start of the year (7,451 versus 7,384). This is a decent result in the context of both global and domestic turmoil, and in an environment where the US stock market fell 20%.
Overall, of the 794 funds in our dataset of UK-domiciled rated funds, 21 boasted double-digit growth over the year. Meanwhile, only 134 funds saw positive growth at all – the rest posted negative returns. Of these 134, nine funds belong to the US Large-Cap Value Equity category and 8 to UK Large-Cap Equity. Some 11 funds have a global focus, 10 invest in the US or in US dollars, and five have a UK or GBP focus.
If you’re a regular reader of our monthly summary on fund performance, you will have noted that BGF World Energy has been mentioned over and over, and as such, it is no surprise to see it beat the rest with a solid margin. The fund, which has a Morningstar Analyst Rating of Neutral, was up 57.16% over the year, 14 percentage points clear of the second highest performer Aspect Core UCITS.
This is also a repeat of last year’s performance, according to Ben Yearsley at Shore Financial Planning: “It is very unusual to see the same sector reaching top spot in consecutive years, but energy funds have achieved it in 2021 and 2022. This is in part due to the rebound from depths the sector reached during Covid, but also Russia invading Ukraine, and the lack of investment in new carbon-based projects leading to high oil and gas prices has been a factor. I’m not sure these same funds will make it to the top for in 2023, but the outlook for energy companies is still good.”
Three JP Morgan funds among the top 10: Natural Resources and Global Natural Resources, as well as Latin America Equity. These are also funds that have been doing well all year due to the comeback of natural resources and commodities among top performers. Silver-rated Polar Capital Global, which invests in financial services and insurance, is the highest-rated fund.
At the other end of the list we find Morgan Stanley’s US Growth fund with a 55.98% negative return. Readers with a longer memory will recall that this Bronze-rated fund was the best performer in 2020, with a staggering gain of 110%.
Three of the five worst performing vehicles in 2022 are in the US Large-Cap Growth category – and those three all belong to the investment firm.
In fact, we only find four fund houses in the bottom 10. Baillie Gifford also had three funds featured, T. Rowe Price had two, and Jupiter had two – and all have a growth focus except for Jupiter Smaller Companies Focus (which is a blend fund).
Overall, 340 funds suffered double-digit losses, and 99 of them saw more than 20% shaved off their value.
Top and Bottom Funds in December
As we round up the year 2022, we do need to look at the month of December too, where we saw some recovery for previously struggling Asian categories. The only double-digit gainer of the month was Fidelity Asian High Yield (10.88%), which was probably a relief for a fund down 14% in 2022. The top 10 all invest in the Asian market – the top four in Asian high yield bonds. All these funds have had a negative year overall, but as China's economy re-opens
Meanwhile, the bottom 10 funds were all funds with double-digit losses over the entire year, and mostly belonging to the growth and technology categories. PGIM Jennison US Growth struggled the most, losing 9.51% – and was beaten by 0.01 percentage points by Lord Abbett Innovation Growth, which lost 9.50%.
Franklin Technology was the largest fund in the doldrums; the £6 billion fund was down 8.16% in December. The vehicle also happens to be the 11th worst performing fund of the year – just one spot shy of our list. Morgan Stanley US Growth made an appearance in the biggest monthly losers list too, the only fund to appear in both annual and monthly lists.
