The first quarter of 2024 has provided several markets around the world with record highs, and with The Magnificent Seven (Alphabet [GOOGL], Amazon.com [AMZN], Apple [AAPL],Meta Platforms [META], Microsoft [MSFT], Nvidia [NVDA], and Tesla [TSLA])continuing their bull run, fund investors have been rewarded.
These were the best and worst performing funds in Q1 this year.
As Morningstar's European markets strategist Michael Field said in a recent video, it's been a "strange" quarter – but it's been overwhelmingly positive.
"The market dipped a little bit in January and then just recovered again, and you're looking at (…) close to all-time highs for most markets now. That's despite a mixed earning season. It seems to just have shrugged all of those things off," he says.
So where does that leave funds? We have looked at the over 3,200 Morningstar-rated funds available to UK investors, and among these, almost 90% managed to achieve a positive return over the first three months of 2024.
US large-cap growth and blend categories had the strongest growth, but also Japan, technology and financial services funds were among the best performers – all with returns above 10% on average. The larger global equity categories also had a strong quarter, growing in the high single digits.
Best 10 Performing Funds in Q1 2024
The best performers in our dataset for the first quarter of 2024 were two GQG Partners funds – US Equity and Global Equity, returning 24% and 20%, respectively.
Overall there are three US equity funds and five global equity strategies. And, the last two funds, completing the top 10, were thematic technology strategies: Neuberger Berman 5G Connectivity, and Janus Henderson Global Technology Leaders.
All the funds in the top 10 returned over 18% over the quarter. That said, almost 300 funds returned over 10% in the quarter.
Bottom 10 Performing Funds in Q1 2024
While it was a strong quarter for markets, there were about 400 funds that fell over the same time period. The worst performer was WS Amati Strategic Metals, with a 14% loss – though it recovered some lost ground in March, when it grew by 12% to become one of the 10 best performers for the month.
The only other fund to see double digit losses in Q1 was the infrastructure fund VT Gravis Clean Energy Income, down 13%.
Overall, the bottom 10 list contains another four infrastructure funds, but the rest of the list is a mix, featuring equity categories with global, Chinese, European, and Brazilian equities.
Gold Soars in Solid March for Markets
Looking at the past month only, the best performing funds were gold equities, but the vast majority of funds grew. Only 100 funds among 3200 had negative returns.
All the seven best funds invest in precious metals, followed by three natural resources funds (including WS Amati Strategic Metals). The best performer, , grew 23%, and the second best, Ninety One Global Gold, grew 22%.
Ben Yearsley, director at Fairview Investing, says meaningful trends are still hard to find, however.
"With the price of an ounce of gold rising almost 10% in March (gaining almost $200 [£157.97] an ounce to $2,238) it's no surprise seeing gold equities finally coming to the party, though you do wonder where they've been for the last year," he says.
"Baker Steel Gold & Precious Metals topped the pops (…). However, if you look at a performance chart since the start of the year and the fund is flat similar to most similar funds. Does this mean these funds are still cheap? You have to go a long way out of the top ten before hitting any other meaningful trends other than gold and commodities."
Meanwhile, the bottom list doesn't show a clear trend but is rather a mix. Guinness China A Share fell 5% and was the worst performer in March, but unlike the majority of last year, it's only one of two China funds in the list, alongside Matthews China Small Companies, which fell 2%). Both these funds were among the best performers in February.
Elsewhere we find Asia ex Japan, Europe and biotechnology. Just beyond the bottom five, there's even technology (Sanlam APAC Artificial Intelligence) and Japan (Baillie Gifford Japan Smaller Companies).
Yearsley adds: "optimism is the name of the game – well if you're a fund manager it is. Not always known for their forward thinking, fund managers are at their most optimistic for two years – all we need now is those well-known mystic megs– economists– to come to the party. On a serious point, the hard landing scenario seems to have gone now with soft or no landing the emperor’s new clothes."
