Oil and energy funds feature heavily in our table of the worst performing funds in 2017.
Five out of the 10 biggest fallers over the year invest in oil or energy stocks. Gold funds have also had a bad time, with three funds appearing in the bottom 10.
However, the overall worst performer of the year was Manek Growth, shedding 24%. The fund is due to close on December 28, which will be a relief to the investors that remain in the fund as over the years it has been a serial underperformer. Darius McDermott, managing director of Chelsea Financial Services, notes the fund has posted double-digit losses over one, three, five and 10 years, as well as since its launch in 1997.
This fund is closely followed by VT Craigshannoch Multi Strategy, which is down 23.9% in 2017, followed by HC Charteris Gold and Precious Metals fund.
According to Adrian Lowcock, of Architas, the fund manager, gold funds suffered generally in 2017 due to the strong performance from equity markets in both developed and emerging economies.
“Gold was shunned by investors chasing the equity market boom and willing to take on more risk,” adds Lowcock.
Investor demand for gold went up during key political moments throughout the year. But more recently gold demand has been subdued, some of which may potentially be attributed to the rise of Bitcoin.
Lowcock argues that HC Charteris Gold and Precious Metals exposure to the small cap space of the gold market makes it exceptionally vulnerable in such market conditions.
Schroder ISF Global energy was the fourth worst-performing fund in 2017, declining 20%. It was followed by Smith & Williamson Global & Gold Resources, which lost 17%, and Investec Global Energy, down 16%.
Elsewhere, the GS North America Energy & Energy Infrastructure Equity Portfolio suffered losses of 15.2%.
Lowcock notes that whilst commodity prices stabilised and improved throughout the year many companies in the sector are still adjusting to generally lower prices than they saw a few years ago.
He adds: “At the same time investors have avoided the sector as growth looked hard to come by and the fiscal stimulus promised by President Trump failed to materialise.”
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