Best and worst performing funds and trusts of Q1 2022

• Gold and Latin American funds top the performance tables in Q1 2022
• Russian funds bring up the rear
• Baillie Gifford funds suffer a dire quarter, including Scottish Mortgage
• UK Smaller Companies funds find themselves at the bottom of the performance tables

Laith Khalaf, head of investment analysis at AJ Bell, comments:

“Clearly the first quarter of 2022 has been dominated by the Ukraine crisis, and in the investment markets, that’s probably been most keenly felt by investors in Russian funds, with the JPM Russian investment trust losing 94% of its value over the course of the quarter. Only a handful of extremely adventurous investors will have meaningful exposure to such investments, but the performance figures do highlight the risk of choosing funds which target the shares of only one emerging market country.

“There have of course been second order effects of the conflict, such as the rise in the oil price and other commodities, which have helped boost the share prices of energy, commodity and Latin American investment funds. Latin American funds have also benefited from strong performance from financials in the first quarter, after interest rate rises in Mexico and Brazil. Gold funds have also had a strong quarter, with the gold price rising from $1,800 at the start of the year to over $1,900 now. The Ukraine crisis has heightened uncertainty for the global economic outlook, and with inflation posing a serious threat to cash and bonds, investors have clearly looked to gold as a safe haven.

“After seeing some tremendous gains in 2021, UK Smaller Companies funds and trusts find themselves languishing near the bottom of the performance tables in 2022 so far. Inevitably after a period of such strong performance there will have been some profit taking, and combined with a weaker economic outlook and a rotation away from growth, that has left smaller companies funds deep in the red in the first quarter of the year.

“Baillie Gifford also finds an uncharacteristically large number of its fund range populating the bottom of the performance tables. These hitherto high flyers have been laid low by a sell-off in technology and growth stocks, which feature heavily in Baillie Gifford portfolios. This includes the largest UK investment trust, Scottish Mortgage, which saw a fifth of its value wiped out in the first quarter. That’s actually after a rally in the last month or so, before which, the investment trust was nursing year to date losses of around 35%. The trust has a very risk hungry approach to investing, so big drawdowns are part and parcel of what investors can expect from Scottish Mortgage. The trust’s long-term performance is still exceptional, though it has been riding on a tailwind of stellar growth from tech stocks, and could face more challenging times if that goes into reverse.

“Looking forward, inflation and geopolitics look set to dominate proceedings for the foreseeable future, and both have an unsettling effect on markets. However that doesn’t rule our further advances for markets, seeing as they offer investors a chance of beating inflation in the long term, unlike cash and bonds. As ever investors shouldn’t base their decisions on calling unpredictable macroeconomic events, and should instead look to put money to work in the market at regular intervals, which helps to smooth the ups and downs. And with the end of the tax year now in sight, they should of course try to make their portfolios as tax-efficient as possible using their SIPP and ISA allowances.”

Best and worst performing funds and trusts Q1 2022

Source: Morningstar, total return