TD Recommended Funds - Highest and lowest returns

Highest returning funds last quarter

The best performing fund in our Recommended Funds list, for the second quarter in succession, was BlackRock Gold & General, which returned 43.1% over the three-month period. The fund invests primarily in gold mining companies, which have continued their strong rally. The gold price has risen 25% over that period.

TD Recommended Funds providing the highest returns in Q2
BlackRock Gold & General View report Invest now
First State Global Resources View report Invest now
Guinness Global Energy View report Invest now
Veritas Global Equity Income View report Invest now
First State Global Listed Infrastructure View report Invest now
Veritas Asian A GBP View report Invest now
Schroder US Mid Cap Z Acc View report Invest now
BlackRock Global Property Securities Equity Tracker View report Invest now
L&G All Stocks Idx Lnkd Gilt Idx I Dis View report Invest now
Polar Capital Global Insurance I GBP Inc View report Invest now

The continued rebound in resources is reflected in the strong performance of First State Global Resources, which was the second best performer over the quarter, and Guinness Global Energy. The First State fund focuses on companies around the globe which are involved in the discovery, development, extraction, processing and distribution of natural resources. The largest sector positions are in energy, and gold and precious metals. The Guinness fund has significant exposure to integrated oil and gas and oil and gas exploration and production.

Other funds which performed well over the quarter are spread across a diverse array of asset classes and include Veritas Global Equity Income, First State Global Listed Infrastructure, Veritas Asian, Schroder US Mid Cap, Polar Capital Global Insurance and JPM Emerging Markets Income.

The Veritas and JPM funds highlight a move towards more global equity income. Funds such as these can offer a way of diversifying across a broader range of dividend paying companies in a wider number of sectors. Limited equity income exposure to a single market such as the UK can leave investors heavily skewed towards certain sectors such as oil and gas and mining. Global dividend growth is also higher than that of the UK at the moment.

Past performance is not a reliable indicator of future results

TD Recommended Funds - Highest and lowest returns in Q2 2016

Past performance is not a reliable indicator of future results
Source: Morningstar Direct as at 30 June 2016.

Lowest returning funds last quarter

Franklin UK Mid Cap was the worst performing fund over the quarter. Mid and small-cap companies have suffered more than their large-cap counterparts as a result of the market uncertainty we saw over the quarter, particularly in the lead up to the EU Referendum. The Leave result then saw investors selling these stocks, which are typically more domestically focused, for the perceived safety of blue-chip companies.

TD Recommended Funds providing the lowest returns in Q2
Artemis UK Select View report Invest now
MFM Slater Growth View report Invest now
Kames Ethical Equity View report Invest now
Liontrust UK Smaller Companies View report Invest now
H2O MultiReturns View report Invest now
M&G Property Portfolio Suspended

Artemis UK Select, MFM Slater Growth, Kames Ethical Equity, and Liontrust UK Smaller Companies also underperformed for similar reasons, as parts of the UK market suffered a sell off. We would expect them to pick up once there is more clarity around the political and economic outlook.

H2O MultiReturns had its second disappointing quarter in a row. It is an absolute return fund which relies on the skills of its managers to make big bets in areas in which they have high conviction. As a result there are periods when the managers’ views are not rewarded. We have cautioned before that this fund is likely to be volatile in the short term, but it remains a good long-term investment.

M&G Property Portfolio also suffered from the market uncertainty. Transaction volumes have reduced, and investor redemptions have increased, as businesses and investors alike have been postponing plans, which is having an impact on rental growth and capital values of commercial property.

Past performance is not a reliable indicator of future results

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