China funds dominated performance tables in September following Beijing’s economic pledges, while UK smaller companies funds sagged over rumours that taxes on AIM may rise.
The average China fund grew by more than 16 per cent throughout September, with almost all that growth coming in the last week of the month.
“The top 44 funds last month were all China funds, with the 45th being an Emerging Markets fund, then back to China again,” noted Ben Yearsley, director of Fairview Investing.
The surge came after China unveiled its largest set of economic stimulus measures since the pandemic, with the country’s central bank cutting its benchmark interest rate by 50 basis points.
China also managed to drag the Asia Pacific (five per cent rise) and global emerging markets (four per cent rise) funds up to second and third best performing sectors.
The trend was mirrored in investment trusts, with all three China-focused trusts having the best performance in the industry, rising an average of 23 per cent.
Looking further down the table at something not Chinese, and property investment trusts managed to grow around six per cent, with Yearsley saying that “base rate cuts and a taming of inflation has led to investors rediscovering property as an asset class”.
Meanwhile, the worst performing sector was healthcare, with funds focusing on it losing 4.5 per cent throughout the month.
This was closely followed by UK smaller companies funds, with three of the top five worst performing funds focusing on British microcap stocks.
Their poor performance came after rumours emerged that Chancellor Rachel Reeves would be eliminating inheritance tax breaks from AIM shares, sending the sector worrying over the “ongoing viability” of the junior market.
Top funds in SeptemberReturn (per cent)Redwheel China Equity+30.2Matthews China+30.1FSSA All China+27.1GAM Multistock China Evolution+25.6JPM China+24.9Source: FE fundinfo