Based on data taken from FE Analytics between 1 January 2017 and 1 January 2018, Shore Financial found eight of the top 10 funds were either Asian or Chinese, with smaller companies funds occupying the other two places.
It also found China was the top performing fund sector with three smaller companies sectors making the top five.
Baillie Gifford shines
The two top-performing funds during the year were the Baillie Gifford Greater China Fund, which returned 49.19% over the period, followed by the Baillie Gifford Pacific Fund with a return of 42.37%.
These were followed by JPM Asia Growth and Baring Eastern Trust which produced returns of 42.27% and 42.22%, respectively.
Two smaller companies funds followed closely behind, with the Elite Webb Smaller Companies Income & Growth and Jupiter UK Smaller Companies returning 41.66% and 41.45% respectively (see chart below).
China tops sector performance
In terms of IA fund sectors, China came out as the best performing with a return of 36.51%.
This was closely followed by a trio of smaller companies sectors. During last year, the Japanese Smaller Companies returned 31.55%, UK Smaller Companies 26.56% and European Smaller Companies 25.77% (see chart below).
This came during a year where all IA fund sectors made a profit for investors and only 59 out of 2,498 funds fell in value.
Ben Yearsley, director at Shore Financial Planning, said: “China and Asia led the way, but after a fairly poor 2016, UK Smaller Companies had a resurgence in 2017 to run Asia close. But well done to Baillie Gifford for having the two best performing funds of last year.”
The success of Asia in 2017 was also reflected in market performance, with Hong Kong’s Hang Seng, MSCI Emerging Markets and Japan’s Topix returning 41.29%, 30.55% and 22.23% respectively.
Yearsley added: “With the benefit of hindsight, asset classes performed as expected in 2017 if you look at the macroeconomic background of tightening rates in the US and reasonably strong global growth. Riskier assets were nearer the top of the performance tables and gilts and bonds were closer to the bottom.”
Bottom of the pile
At the opposite end of the spectrum, the worst-performing fund list was dominated by energy and gold funds (see chart below).
The bottom 10 included Investec Global Energy (-13.05%), Charteris Precious Gold and Metals (-12.46%), Smith and Williamson Global Gold & Resources (-11.55%), MFM Junior Gold (-8.89% ) and MFM Junior Oils (-7.94%).
The freshly-closed Manek Growth fund was the worst returning for the year with -23.03%.