Which were the best and worst funds in October?

Political events in Japan and China buoyed global equity markets in October as Shinzo Abe won a surprise election and China saw some stability with the Communist party’s summit strengthening president Xi Jinping’s position.

The Matthews Asia Ex Japan Dividend fund was the top-performing fund over the month, up 9.8 per cent, followed by the GAM Star Emerging Equity fund, which returned 9.5 per cent. Jupiter India was the best-performing country specific fund, up 8.5 per cent.

While Japan, China and Asia sectors took five spots in the top 10 table in October, the pole position was taken by Technology & Telecommunications. Investment director at Architas Adrian Lowcock attributes this to investors shelling out for the expensive stocks to tap into their growth potential.

“The sector has the second best earnings growth forecasts in the S&P, behind the recovering energy sector,” Lowcock says. “Within technology the Legal & General Technology Index trust outperformed actively managed funds. Active managers may struggle to outperform the index as it is hard to justify owning some of the technology companies due to the high valuations and identifying the next winners in a rapidly evolving sector has always been a challenge.”

Gold and biotech funds struggled in October as investors shunned gold in favour of less defensive assets and merger and acquisition activity dropped in the biotech sector, prompting investors to turn their attention to artificial intelligence, robotics and niche technology funds, Lowcock says.

MFM Junior Gold was the worst-performing fund over the month, down 6.5 per cent, with a further three gold and precious metal funds in the bottom 10.