Contrarian investors rewarded in 2016

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Contrarian investors rewarded thus far in 2016
Gold shares and emerging market bonds are among those unloved asset classes that have delivered an excellent performance since the beginning of the year.

Our sister magazine Money Observer has analysed the performance of its Rated Funds since the start of 2016 to test how far the most unloved areas of investment have paid off, following the example of FundCalibre (part of Chelsea Financial Services), which conducted a similar analysis.

In the analysis of Money Observer Rated Funds, the top performer was the Investec Global Gold fund, which yielded a massive 53% over the year to date.

Safe haven

In FundCalibre's analysis BlackRock Gold & General gained 38% over the same period.

"Gold has come into its own as investors have flocked to it as a perceived safe haven," says Clive Hale, director at FundCalibre.

"I prefer to call it an insurance policy against central bank stupidity. It's too early to say if the precious metal has bottomed, but anyone taking the plunge in January has been very well rewarded."

In second place, BlackRock World Mining (BRWM) trust has gained an impressive 27.7%.

Legg Mason IF Japan Equity, third in the Rated Funds table since the start of January, gained 15.4% - in stark contrast with most other funds invested in Japan's battered stockmarket. The sector as a whole has lost 3.4% over the period.

In fifth place, Murray International investment trust (MYI), which is led by contrarian manager Bruce Stout and has struggled consistently over recent years, has now gained 9.4% over the year.

Watch our interview with Murray International's manager Bruce Stout here.

Emerging markets turnaround on the cards?

Investing in the emerging markets has also paid off after years largely out of favour, as PFS Somerset Emerging Markets Dividend Growth gained 7.6% and JPMorgan Global Emerging Markets Income Trust (JEMI) grew by 7.4%.

"Could this be the turnaround patient investors have been waiting for? It's a very short period of time to be looking at, but both the Latin America and Emerging Markets fund have outperformed their indices by 40 to 50%, year-to-date, which is good going," comments Hale.

Among FundCalibre's picks, Aberdeen Latin America (ALAI) gained 20.8% and Lazard Emerging Markets increased by 8.7%.

"It's also too early to say that emerging markets are finally coming out of their doldrums, but it is a reminder that you can make money in all types of market conditions," Hale adds.

At the bottom of the table, smaller company funds, and particularly investment trusts focused on this part of the market, have suffered, with BlackRock Smaller Companies (BRSC) trust shedding 12.7%, Aberforth Smaller Companies Trust (ASL) losing 12.5% and Henderson Smaller Companies Investment Trust (HSL) losing 13.7%.

Biotech funds have fared even worse as the market has corrected after huge gains over recent years, with Biotech Growth Trust (BIOG) shedding 22% and Axa Framlington Biotech losing a shocking 25% since the start of the year.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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Fund Data
Name1 Year (%)3 Years (%)5 Years (%)Rating
AXA Framlington Biotech10.0214.83166.512 star(s)
BlackRock Gold & General-2.3634.02-31.824 star(s)
Investec Global Gold-3.2033.27-31.054 star(s)
Lazard Emerging Markets15.6940.5240.532 star(s)
Legg Mason IFJaEq45.82157.97311.285 star(s)
MI Somerset EmgMktsDivGth21.3843.5451.084 star(s)

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