Despite the surprise early announcement of a general election, UK funds were standout performers in May.
In particular, small caps enjoyed a solid month for returns with the IA UK Smaller Companies sector up 6%, according to FE Fundinfo data.
European Smaller Companies was the second best-performing sector, up 4%, while UK All Companies (3.1%), UK Equity Income (3.1%) and Europe including UK (2.9%) rounded out the top five.
| Fund sectors – one month (top five) | Return % |
| UK Smaller Companies | +6.05 |
| European Smaller Companies | +3.95 |
| UK All Companies | +3.14 |
| UK Equity Income | +3.08 |
| Europe inc UK | +2.87 |
“The UK market finally appears to be garnering attention,” Ben Yearsley, director at Fairview Investing, said.
“Takeovers and M&A are almost a daily occurrence now – some [were] rebuffed like BHP’s attempt at Anglo and the PE approach for Hargreaves Lansdown, while others went through.
“It’s fascinating though that UK small cap is also joining the party topping the performance charts in May – the rally is spreading. Despite this, the UK still looks cheap offering good yields and defensive characteristics- the only thing missing is proper growth stocks.”
UK-focused strategies were also prevalent among the top performing individual funds, with Crux UK Smaller Companies the standout at 12.6% for the month.
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This was followed by Zeus Dynamic Opportunities, up 10.5%, Invesco UK Smaller Companies Equity, up 9.3%, and Amati UK Listed Smaller Companies, up 9%. Each of these funds placed among the 10 best performers for May.
However, Active Solar topped the chart, rising 14.3% in May. The strategy invests in the solar supply chain rather than the renewable generators.
Meanwhile, Latin American strategies suffered, falling 4.8% in the month. Despite exit polls suggesting a majority for Narendra Modi in the Indian election, the IA India/Indian Subcontinent sector dropped 1%.
In terms of investment trusts, Foresight Sustainable Forestry surged 44.4% off the back of a takeover bid from Averon Park.
| Fund sectors – one month (bottom five) | Return % |
| Latin America | -4.76 |
| India/Indian Subcontinent | -1.04 |
| China/Greater China | -0.7 |
| Global Emerging Markets | -0.69 |
| Japan | -0.66 |
This article was originally written for our sister publication, Portfolio Adviser
