After more than a week of tariff-induced stock market chaos, it’s worth remembering that, over the long term, market sell-offs barely show up as more than a blip on a chart. But assessing what has done especially well (and especially badly) in recent days can offer some useful insights, too.
FE data from 1 to 9 April gives us a sense of how funds have fared.
Looking at the losers, it’s unsurprisingly the portfolios that are cyclical (and therefore sensitive to an economic downturn) and funds operating in regions seen as big victims of the trade war that have suffered most.
The 46 per cent tariff imposed on Vietnam by the US means the trusts dedicated to investing there have suffered horribly, with China, Asia and US funds also notably down. The spectre of recession means that both commodity and financials funds have slumped, while as we note separately this week, small-cap portfolios have also taken a hit.
Such shifts have big implications for the equity funds that served as a safe spot for investors in the first quarter of 2025.
I noted in late March, for example, that both income and value funds had held up well at that point. But weakness for energy and financials poses problems for many such portfolios. Take Temple Bar (TMPL), a big backer of financials that really delivered the goods in the first three months of this year. The UK income fund has run into choppier waters so far in April, with the shares down by around 10 per cent.
Similarly, European equities, the star performers until recently, are now struggling in the face of tariffs. Of course, as is usually the case with a broad-based sell-off, equities in general are having a bad time. Not a single Investment Association or Association of Investment Companies equity sector is up over this period.
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What, if anything, has done well? Government bond funds around the world have had a good showing. This includes US government bond funds, although their resilience may not last long if the sudden sell-off seen in the early part of this week persists.
This might reflect concerns about the nation’s finances, although it is fair to say that investors might be selling down some sovereign bonds (Japanese as well as US) to generate liquidity in their portfolios.
Elsewhere, the gold price has slipped from recent highs, owing in part to some investors flocking to the US dollar as a safe haven – although the reserve currency has not appreciated consistently over this period.
Sticking with alternative asset classes, property and infrastructure have not suffered too badly, perhaps reflecting the fact that such assets are not so directly affected by global trade spats.
Turning to funds that look to protect you in a market sell-off, the following names have done reasonably well.
Ruffer (RICA) has made a share price total return of around 3 per cent, with Capital Gearing (CGT) and Personal Assets (PNL) investors down by around 1.5 per cent. BH Macro (BHMG), the enigmatic hedge fund, has returned 2.3 per cent, but the racier RIT Capital (RCP) is off by 4.6 per cent in terms of share price.
As such, plenty of funds are behaving in the way we might expect. This may be cold comfort, but it does help those with a decent level of diversification built in to their portfolios.