Commodities and natural resources trusts see turnaround in 2016

Gold-ingot-700.pngThe Commodities and Natural Resources sector is the top-performing investment trust sector year to date having risen 72 per cent, according to the AIC.

The high returns mark a comeback for the sector, which has declined in each of the previous four years.

In second place for performance is the North America sector, up 34 per cent, followed by Global Emerging Markets and Global Equity Income, which are each up 31 per cent, helped by sterling weakness following the Brexit vote.

screen-shot-2016-12-12-at-12-16-52Overall, investment trusts have performed well in terms of share price total returns, with the average trust up 12 per cent, which can be attributed to the vehicles’ overseas exposure. This is highlighted by the figures for UK trusts, which have struggled since the referendum, with the UK Smaller Companies sector down 10 per cent and the UK All Companies sector down 4 per cent. This is in sharp contrast to 2015, when the UK Smaller Companies sector outperformed the average investment trust by 15 percentage points in the previous year to 30 November 2015, while the UK All Companies sector beat the average trust by 12 percentage points.

Individual top performers include the Alternative Liquidity fund in the hedge fund sector, up 139 per cent year to date; BlackRock World Mining, up 95 per cent and JPMorgan Russian Securities, up 67 per cent.

screen-shot-2016-12-12-at-12-17-30The VCT sector was up 3 per cent year to date. The VCT Specialist: Environmental and VCT Generalist were the leading sectors, each up 4 per cent. The top performing VCTs year to date were Artemis VCT, up 30 per cent and Downing TWO VCT D shares, up 26 per cent.

Annabel Brodie-Smith, communications director at the AIC, says: “It’s been a year of surprises, and investment company performance has consequently had its ups and downs but performance for the sector as a whole has been resilient over the year. Sectors that had a challenging time in 2015, like Commodities and Natural Resources and Global Emerging Markets, are this year’s ‘comeback kids’, with some UK focussed sectors having a more difficult time given sterling’s weakness.

She adds: “2016 highlights the importance of having a balanced portfolio and a long-term view. One year’s underperformers can be the next year’s winners showing how important it is not to react to short-term market movements.”