Top performing funds in Q3 had high exposure to the late surge in Chinese equities and the rally in the gold price, data suggests.
However, China funds were also the riskiest.
Data from FE fundinfo shows Matthews, Invesco and Xtrackers had the top performing funds distributed in the UK.
Analysed by sectors, the best performance was from the China/Greater China sector which delivered a return of 12.22%.
Charles Younes, deputy chief investment officer at FE fundinfo, said: “The surge in Chinese equities was largely driven by the unveiling of a comprehensive stimulus package from the People’s Bank of China at the end of September. A pledge from the Politburo to introduce further steps to reignite economic growth and stabilise the beleaguered property sector followed shortly after and further contributed to a boost in market sentiment.”
However, Chinese equity funds also ranked among the riskiest funds, with several China-focused funds such as Redwheel China Equity, Matthews China, and Baillie Gifford China topping the list of most volatile funds in the UK this quarter.
Younes said: “Despite their strong performance, Chinese equity funds were among the most volatile in the third quarter of 2024. Sentiment fluctuated significantly during the period, with recessionary risks increasing until a series of stimulus announcements in the final week of September shifted outlook.
“However, while these measures provided a short-term performance boost at the end of the quarter, it remains unclear whether they will have a lasting impact on China’s economic recovery. Furthermore, since the end of September, China’s stock market has faltered with some benchmark share indexes experiencing their biggest daily losses since the Covid-19 pandemic began.”
Gold-exposed funds also performed strongly after gold prices reached a new high of almost $2,700/oz over the quarter. The gold market saw structural buying from emerging market central banks, particularly the People’s Bank of China, said Younes.
