The best and worst funds of the year

published 24 December 2009

At the beginning of 2009, it looked like it was going to be hard to make any money at all over the year. It turned out to be hard not to. According to figures from Morningstar, almost 95% of the 1,914 funds available in Britain produced a positive return in 2009. However, some did spectacularly better than others. The winners? Anything considered risky. Mining, small-cap and emerging-market funds all had a very good year indeed.

Big returns for the brave in 2009

The top two performing vehicles of 2009 were small-cap funds. Close's Special Situations and Beacon Investment funds rose 239.6% and 181.3% respectively. Both were helped out by the fact that they held western Australian-based gold miner Norseman Gold (LN: NHL) in their portfolios: the firm's shares have risen 2,929% so far this year.

Emerging markets also had quite a year. According to figures from Reuters, the best-performing market in 2009 was Brazil's a long-term Moneyweek favourite. The Bovespa Index surged 145% in dollar terms, helped in part by the 29% rise in the value of its currency. Add in the fact that Peru's Lima General Index was also in the top five (up 120%) and it is no surprise that Latin American funds among the top performers for the year. Neptune, Invesco Perpetual, Threadneedle and Scottish Widows offerings all returned over 80% in 2009.

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The Philippine's SE Industrial Index was another top-performing stockmarket over 12 months. It's up 118%. There's no ETF for the Philippines, but many investors use Philippine Long Distance Telephone (US: PHI) as a proxy for the market as a whole. It accounts for 23%of the index, but having risen only 20%, wasn't much of a proxy in 2009.

Gold and Russia keep shining

At the start of the year, the gold price stood at $869 per ounce and now hovers about the $1,100 mark a rise of 27%. That helped JP Morgan's Natural Resources and the CF Ruffer Baker Steel Gold funds both rise around 100%this year. Rising commodity prices have also been good news for funds focused on Russia. The Neptune Russia & Greater Russia fund is up 105%, for example, and JP Morgan's New Europe fund has posted a 93% rise.

Reits beat funds

Unsurprisingly, given the lack of credit about, property was one of the worst-performing sectors this year. New Star International Property fell 29.37%. Close on its heels was Aviva Investors Asia Pacific Property, down 25.6%. That's a pretty galling performance, given how well many Singapore real-estate investment trusts (Reits) have performed this year. Since we tipped it on 10 April, Ascott Reit (SP: ART) has returned 172%, while Ascendas Reit (SP: AREIT) is up 42.67%. Nippon Commercial (JP:3229), a Japanese Reit we also looked at earlier this year, is up 26.9%.

There haven't been many other outperformers in Japan. We willed the market on as best we could, but Japan's Topix has risen just 3.4% this year. That's the smallest return among the world's 30 largest stockmarkets, according to data from Bloomberg. No surprise then to find that of the worst 20 performing funds in 2009 ranked by Morningstar, 14 are Japanese. L&G Japan fell 14.8%, Axa Rosenburg Japan fell 12.5% and Legg Mason Japan 12.3%.

Best and worst of the decade

It is nearly 2010. So who's had the best and worst of it over the last ten years? As most would guess, technology funds don't come out too well. At the height of the dotcom bubble in 1999/2000, everyone wanted tech funds retail investors had an average of 40% of their portfolios in them. Since then, the Axa Framlington Global Technology fund and New Star Technology have collapsed they are still down 71.57% and 69.2% respectively. Japanese funds have also been a poor investment. JP Morgan Japan is down 68%, while Legg Mason Japan is down 66.7%.

Over ten years, BlackRock Gold and General, a fund we have been tipping for nine years, has been by far the best performer. It's risen 752% as investors have looked for safety in a long established gold fund. "When everything else was collapsing last year it was one of the only funds that did well," says Jackie Beard, head of UK research at Morningstar. "It's an extraordinary fund and I have my own money in it." BlackRock Gold and General is followed by JP Morgan Natural Resources and Threadneedle Latin America. They returned 628% and 390% respectively.

Meanwhile, the average investment trust is up 50% over the last ten years, according to the Association of Investment Management Companies. And the top performer? JP Morgan Russian Securities, which rose a staggering 1,398%. That means that a £1,000 investment in JP Morgan Russian Securities ten years ago would now be worth more like £14,000. In 2009, the trust was the tenth-best performing trust, rising 109%.

Jody studied at the University of Limerick and she has been a senior writer for MoneyWeek for more than 15 years. Jody is experienced in interviewing, for example in her time she has dug into the lives of an ex-M15 agent and quirky business owners who have made millions. Jody’s other areas of expertise include advice on funds, stocks and house prices.