Technology funds bounce back in Q1

Despite facing into a headwind in the form of rising interest rates, tech-focused funds have led the pack so far in 2023 – by Saltydog Investor

As we move into the final week of March, we have a look at which funds have been the winners and losers so far in 2023.

The year started well and in January nearly all the Investment Association (IA) sectors made gains. The only ones that struggled were Healthcare, which fell by 0.7%, and India/Indian Subcontinent, which went down by 3.3%. The best-performing sectors were Technology and Technology Innovations, which made 9.3%, followed by China/Greater China, which rose by 8.4%.

More than 95% of the funds that we monitor made gains and the best, Baillie Gifford American, went up by 12.5%. Next was Templeton China, up 12.0%, and then there were four funds from the Technology and Technology Innovations sector that all had one-month gains of more than 11%. The worst-performing fund was VT Argonaut Absolute Return, which lost 10.4%.

The upward momentum started to wane in February. Quite a few sectors still went up, but the gains were smaller than in January. The European Smaller Companies sector did the best, making 2.4%, followed by Europe excluding UK, which made 2.1%. Next were the UK Equity Income and UK All Companies sectors, up 1.9% and 1.6%. Technology and Technology Innovations went up by 1.0%. The Chinese sector nearly gave back all its January gains, as it fell by 7.4%.

Just under 50% of the funds went up in February and there was an interesting mix at the top of the table. The leading five funds came from four different sectors. At the top was VT Argonaut European Alpha, which had made 7.0%. Then came the VT Argonaut Absolute Return fund (which was at the bottom of the table in January), up 6.8%; followed by Ninety One UK Special Situations, up 6.4%;  Artemis SmartGARP European Equity, up 5.6%; and Liontrust Global Technology, up 4.9%. At the bottom of the list was the GAM Star China Equity fund, which had lost 12.0% during the month.

Unfortunately, it looks as though March will end up being worse than February. At the moment, less than 25% of the funds are showing month-to-date gains. The best-performing funds are from the Specialist sector, and have benefited from the recent banking problems, which have pushed up the price of gold. The precious metal started the month at around $1,850 per oz and last week briefly went above $2,000. At the top of the table are the following funds: Ninety One Global Gold, up 11.1%; SVS Sanlam Global Gold & Resources, up 10.8%, and BlackRock Gold and General, up 10.1%. The worst-performing funds are from the Financial and Financial Innovations sector, with the Jupiter Global Financial Innovation fund losing 14.5%.

Since the beginning of the year, less than 3% of the funds that we follow have managed to make gains in January, February and March. As you would expect, the Standard Money Market and Short Term Money Market funds have, although they are only up by around 0.8%. Most of the other funds are from the Technology and Technology Innovations sector, but there are also a handful of funds from the Global and North America sectors.

Here are the top 10 funds based on their performance so far this year.

Leading funds in 2023 (1 January to 26 March)

Data source: Morningstar.

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