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Best investment performer of 2019 – Japan Equity fund

5 January 2020

Legg Mason’s IF Japan Equity fund was the best performing fund of the past decade, according to Willis Owen.

Figures showed the fund returned 701.17% between 31 December 2009 and 31 December 2019, as exposure to higher risk Japanese small caps paid off on hopes Japan was out of its deflationary spiral and growth would return.

Polar Capital Global Technology was the second best performing fund (476.89%), while Candriam Equities L Biotechnology (474.32%) came in third.

Overall, technology and telecommunications proved to be the best performing sector (310.88%) of the decade, followed by North American Smaller Companies (279.55%). North America came in third place (248.61%), while Japanese Smaller Companies (246.59%) and UK Smaller Companies (245.71%) trailed closely behind.

Adrian Lowcock, head of personal investing, Willis Owen, said: “The start of the decade saw the back of the worst of the financial crisis for investors but its impact has continued to be felt throughout the last ten years. In a world of low interest rates and low growth, investments in companies that offered much higher levels or high consistent growth were attractive to investors.

“Technology, having been in the wilderness since the bursting of the dotcom bubble, lead the way with a new generation of tech companies from Facebook to Netflix offering investors huge growth potential. “

Although technology was a strong performer, the US market as a whole benefited from the US Federal Reserves policies and government action during the financial crisis. Smaller company sectors featured in the top 10 as they avoided the worst of the financial crisis and benefited from low interest rates due to being able to utilise the new technologies, said Lowcock.

At the other end of the spectrum, Targeted Absolute Return was found to be the worst-performing sector of the decade, with a return of 26.45%.

Having been promoted as an asset class to offer protection following the financial crisis, the sector subsequently struggled. While the objectives of the sector were always going to lag equity bull markets, they also struggled to deliver when equity markets sold off, according to Lowcock.

Also featuring in the worst-performing sectors were global bonds (50.98%) and mixed investment 0-35% shares (52.14%).

In funds, gold and energy stocks were shown to struggle over the period, despite expectations that gold would prove a safe haven in an environment of low interest rates.  MFM Junior Gold was the worst-performing fund, with a percentage return of -70.54. MFM Junior Oils Trust also performed badly (-68.70%), followed by TC South River Gold and Precious Metals (-66.53%).

Lowcock added: “Having played its role as preserver of capital in the financial crisis gold plateaued for much the 2010’s and MFM Junior Gold suffered most as it had exposure to the more speculative end of the market. Likewise, MFM Junior Oils trust suffered as the oil price collapsed reaching a low in January 2016. Energy and mining stocks all struggled as global growth slowed, recession never seemed far away and China struggled to transition from a global exporter to a domestic consumer.”

10 best-performing sectors

10 best-performing funds

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