UK investors see best returns from Gilts in August

Best and worst fund sectorsEmerging market equity funds sold in the UK, particularly those with exposure to Latin America, were the worst performing funds in August.

The Global Emerging Markets sector of the Investment Association fund universe saw a 5.07% loss.

Meanwhile, UK funds also struggled amid Brexit anxiety, but UK Gilt funds emerged as the best performers.

The numbers were produced by Willis Owen, an online investment provider, using FE Analytics data and showed UK Index Linked Gilts returned 7.9% and UK Gilts returned 4.89%.

UK corporate bonds came third with 1.62%.

Ten best performing sectors

Ten Best performing sectors 

Adrian Lowcock, head of personal investing at Willis Owen, said the start of August coincided with a significant change in investor sentiment. There were more concerns over the global economy and fears of a recession rose as longer dated US bonds had lower yields than shorter dated ones – in other words, the yield curve reversed, which has historically been a leading indicator of recession. Investors have also been struggling to keep on top of US-China trade relations.

The fall in Global Emerging Markets came about due to a surprise result in Argentina’s election sending its stock market plummeting 48% in US dollar terms in one day. 

Smaller companies also took the brunt of the sell-off as investors sold out of riskier assets.

“UK equities featured in the worst performing sectors as the Brexit journey took another twist and continued to weigh on the UK,” Lowcock added.

Ten worst-performing sectors

Ten Worst performing sectors

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