Inflation is obviously a growing concern judging by the makeup of the Hot and Not lists this month.
In August, index-linked funds made up all of the funds in the Hot table. In the Not Hot camp, Gold and Japanese large and smaller company funds feature.
What’s Hot?
- All of the funds in the Hot bucket are Index-linked gilts or bonds
- These funds predominately hold bonds with long durations (some 20 years and upwards)...
- ...so are all positioned for a scenario where interest rates stay “lower for even longer”
- In contrast, in a rising rate environment these long duration bonds suffer and it's shorter-duration bonds that are generally a better option.
- The "linked" element gives investors some protection from inflation, which may put in an appearance.
What’s Not?
- Japan is again present in the Not Hot table…
- …and is joined by Gold and Global Resources funds.
- Gold has had a good run. We said here that it may be running out of steam.
- Meanwhile, in Asia there are worries that Japan’s central bank is running out of ideas to deal with its deflationary problems…
- …and that has hit both large and smallcap funds.
FURTHER READING
What's Hot?
|
Manager
|
Fund
|
Sector
|
August Perf. (%)
|
|
BlackRock
|
Index Linked Gilt Tracker
|
IA UK Index - Linked Gilts
|
11.41
|
|
Insight
|
UK Index Linked Bond
|
IA Unclassified
|
11.37
|
|
Henderson
|
Index-Linked Bond
|
IA UK Index - Linked Gilts
|
11.33
|
|
Aberdeen
|
Sterling Index-Linked Bond
|
IA Unclassified
|
11.24
|
|
Threadneedle
|
UK Index Linked
|
IA UK Index - Linked Gilts
|
10.89
|
|
F&C
|
UK Equity Linked Inflation
|
IA Specialist
|
10.87
|
|
Baillie Gifford
|
Active Index-Linked Gilt Plus TR
|
IA UK Index - Linked Gilts
|
10.82
|
|
AXA
|
Sterling Index Linked Bond
|
IA UK Index - Linked Gilts
|
10.73
|
|
Newton
|
Index Linked Gilt
|
IA UK Index - Linked Gilts
|
10.50
|
|
Schroder
|
All Mature Index Linked Bond
|
IA UK Index - Linked Gilts
|
10.47
|
What's Not?
|
Manager
|
Fund
|
Sector
|
August Perf.(%)
|
|
Investec
|
Global Gold
|
IA Specialist
|
-16.00
|
|
BlackRock
|
Gold & General
|
IA Specialist
|
-13.64
|
|
Smith & Williamson
|
Global Gold & Resources
|
IA Specialist
|
-11.23
|
|
Legg Mason
|
IF Japan Equity
|
IA Japan
|
-11.10
|
|
CF Ruffer
|
Gold
|
IA Specialist
|
-9.89
|
|
Invesco Perpetual
|
Japanese Smaller Cos
|
IA Japanese Smaller Cos
|
-9.40
|
|
JPM
|
Japan
|
IA Japan
|
-7.34
|
|
Baillie Gifford
|
Japanese Smaller Companies
|
IA Japanese Smaller Cos
|
-6.63
|
|
First State
|
Global Resources
|
IA Global
|
-4.59
|
|
Fidelity
|
Japan Smaller Companies
|
IA Japan
|
-4.34
|
Source: IA Universe, >£50m in size, UK domicile, 1/8/16-31/8/16