Aussie funds hold up as market sells off in February
Money Management finds out where the strongest-performing funds were last month as the conflict in Ukraine rocked markets.
Australian equity funds and those exposed to commodities such as gold and oil were able to make money during February, when large parts of the market sold off after Russia launched an invasion of Ukraine.
As the chart below show, stock markets around the globe fell last month as investor concerns around inflation and rate hikes by central banks were overtaken by Russia’s decision to send troops into its neighbour, after months of a tense military build-up. The international community responded with a series of sanctions against Russia.
Performance of stock indices in Feb 2022
Source: FE Analytics. Total return in Australian dollars, between 1 February and 28 February 2022.
Global equities (represented by the MSCI AC World) ended February down 5.4% in Australian dollar terms, while Russian stocks lost more than 50%. The ASX 200, on the other hand, was up 2.1% for the month.
This risk-off environment meant that most funds struggled to make returns last month. FE fundinfo data shows only one-quarter of funds for sale in Australia made a positive total return during February (466 out of 1,897 that we examined).
The best result came from the ACS Commodity & Energy sector, where the rising price of oil and other key goods such as wheat meant the average fund was up 4.9% over the month. It was followed by ACS Equity Australia Geared (up 2.8%), ACS Equity Australia Equity Income (2.7%) and ACS Equity Australia (1.6%).
Performance of fund sectors in Feb 2022
Source: FE Analytics. Total return in Australian dollars, between 1 February and 28 February 2022.
Just eight sectors (out of 36 in FE Analytics’ Australian Core Strategies universe) saw their average member post a positive return last month, with the rest in the red. The heaviest average loss came from the ACS Equity Emerging Markets sector, down 6.6%, while ACS Equity Europe wasn’t too far behind with an average fall of 6.2%.
When it came to individual funds, the highest return in February came from BetaShares Global Gold Miners ETF, which was up 11.8%. Select Baker Steel Gold and VanEck Gold Miners ETF were next as investors returned to gold for its safe haven characteristics.
Of the 25 highest returning funds of last month (shown in the table below), 13 reside in the ACS Commodity & Energy sector while four come from the ACS Equity – Australia peer group.
Source: FE Analytics. Total return in Australian dollars, between 1 February and 28 February 2022.
Allan Gray Australia Equity was the best non-commodity fund with a total return of 8.7%.
The $2.3bn fund has a contrarian investment philosophy that see lead manager Simon Mawhinney seek out companies that show long-term value but are currently unpopular with or not well-known by the general investment community. Around half of the portfolio is in materials and energy stocks, which explains why it outperformed last month.
Lazard Select Australian Equity, Lazard Australian Equity, CFS Acadian Wholesale Geared Australian Equity, AllianceBernstein Concentrated Australian Equities and Merlon Concentrated Australian Share are the other Australian stock funds that were among February’s 25 strongest.
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