index bear, UK gilt, uk corporate and money market produce positive returns in third quarter
No equity unit trust or Oeic in the Lipper universe managed to produce a positive return during the third quarter of the year.
The results represent the worst quarter of performance since 1990 when markets were temporarily set back by the Gulf crisis, according to Lipper.
During the most recent quarter on a total return, bid to bid basis, the average UK unit trust and Oeic fell by 15.38%. During the third quarter of 1990, the average unit trust fell by 18.99%.
The worst-affected sector in the three months to the end of September 2001 was Technology and Telecommunications, in which funds fell by an average 38.01%. Hits to funds in that sector included a drop of 52.56% in Edinburgh Technology, 47.48% in Framlington NetNet and 44.35% in Henderson Global Technology.
The events of 11 September are traceable, Lipper said, in a sharp fall in equity unit trust and Oeic performance immediately after the attacks, which exacerbated an already apparent slump in performance over the quarter.
During trading on 12 September, the average UK All Companies fund fell by 4.03%. By 21 September, the average fund in this sector had fallen 14.92% since the attacks. However, a subsequent rise helped the All Companies sector record a 7.96% loss from 11 September to month end.
The impact on funds investing in the US markets was apparent from a fall of 8.2% in the value of the average fund in the Autif North America sector between 11 and 28 September.
Only four Autif fund sectors produced positive returns during the quarter ' the one-fund Index Bear sector, populated by the Govett US Bear fund, and the UK Gilt, UK Corporate bond and Money Market sectors.
Of the four sectors showing positive returns during the quarter, the Index Bear sector returned 9.47%, UK Gilt managed 2.85%, UK Corporate Bonds posted 2.4% and the Money Market sector showed positive growth of 0.59%.
Bond funds in the UK Gilt and UK Corporate Bond sectors saw dramatic reversal of fortunes during the quarter. The average fund saw the UK Gilt rise 2.85% after a fall of 2.68% in the second quarter. The average UK Corporate Bond fund rose 2.41% after a fall of 1.71% in the second quarter.
Returns on bond funds were boosted by reductions in interest rates by central banking authorities as a monetary stimulus for the stalling economy and ailing markets.
European and emerging marke-invested bond funds saw a slight deterioration in performance, with the average fund in the Autif Global Bond sector falling 0.44% during the third quarter. Funds in the UK Other Bond sector saw a larger average fall of 4.98%, partly impacted by the poor performance of zero dividend preference share funds such as the Aberdeen Progressive Growth fund, which fell 22.45%. High yield suffered as the market saw a flight to quality.
Five equity sectors underwent declines in excess of 25% for the average constituent fund over the quarter. Of the 32 Autif sectors, 22 showed average declines greater than 10%.
After the Technology & Telecoms sector, Latin America was the worst-performing sector with an average constituent fund falling 29.52% in value. The Global Emerging Markets sector was down 26.45%.
North America Smaller Companies returned the third worst sector performance with a decline of 27.72% for the third quarter. European Smaller Companies fell 25.84% and UK Smaller Companies were down 23.61%.
The best-performing fund in all sectors in the third quarter was the Govett US Bear, which inversely tracks the S&P500, with a 9.47% return. The Newton Exempt Long Gilt rose 5.38%, the highest return among funds investing in UK Government stocks. Hill Samuel Bond Index Exempt returned 7.10%, Singer & Friedlander Preferred Income returned 5.93% and Aegon European Bond A returned 5.34%.
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