Page 22 - DIY Investor Magazine | Issue 37

Apr 2023 22 Overall, fund performance has deteriorated. In January 95% of the funds we analysed made gains, but that dropped to 36% in March, when most sectors made losses. Exceptions were UK Index Linked Gilts + 7.6%, followed by Technology and Technology Innovations + 4.1%, and UK Gilts + 3.1%. When performance generally deteriorates, cash looks attractive; our most cautious demonstration portfolio, the Tugboat, is 93% in cash or money market funds, and even the slightly more adventurous Ocean Liner, has hit 84%. A major influence on markets was fear of a more widespread banking crisis after the demise of Silicon Valley Bank. The Federal Deposit Insurance Corporation insurance is the US equivalent of the UK Financial Services Compensation Scheme, designed to maintain stability and public confidence in the nation’s financial system. However, over 95% of the deposits with SVB were in excess of its $250,000 per depositor, per institution limit, so were not insured. The Fed intervened to make sure everyone got their money back, but it raised the issue of whether bank deposits were safe around world. When people are concerned about the safety of their money in the bank, they look for alternate ways to preserve their wealth; gold has always been popular, because it is widely accepted and internationally recognised. Government bonds are another option, as the UK has never defaulted on interest or capital payments. The recent banking crisis has been one of the most significant factors in the increasing value of the gold and gilt funds in the last month. They are ‘safe’, because you are very unlikely to lose everything, but in the short term, prices can fluctuate wildly. Although UK Index Linked bonds were the best-performing sector last month, remember that in 2022 they went down by 35%. See more at www.saltydoginvestor.com. GILTS AND GOLD FUNDS SHINE DURING FLIGHT TO SAFETY Most sectors lost money in March, but some specialist funds bucked the wider trend – by Douglas Chadwick DIY Investor Magazine · Technology and Money Market funds were the best-performers in Q1 2023, but last month the best-performing funds were from the Investment Association’s Specialist sector - ‘funds that have an investment universe that is not accommodated by the mainstream sectors’ - which are not performance ranked because of their diverse nature. We do include ‘gold’ funds in Saltydog’s regular analysis and last month, four made it to the top of the pile. They do not just hold physical gold, but companies involved in exploring, mining, processing, or dealing and investing in gold and other precious metals. Ninety One Global Gold fund led the top 10 funds table way with a one-month return of 14.9%. Fund name Ninety One Global Gold BlackRock Gold and General SVS Sanlam Global Gold & Resources LF Ruffer Gold Janus Henderson Index-Linked Bond iShares Index Linked Gilt Index L&G Global Technology Index M&G Index-Linked Bond CT UK Index Linked L&G All Stocks Index Linked Gilt Index Investment Association (IA) sector Specialist Specialist Specialist Specialist UK Index Linked Gilts UK Index Linked Gilts Technology & Technology Innovation UK Index Linked Gilts UK Index Linked Gilts UK Index Linked Gilts Monthly return (%) 14.9 14.4 14.2 12.7 8.4 7.9 7.8 7.3 7.2 7.1 Data source: Morningstar.