Home Business News 50 days of lockdown how have investors fared?

50 days of lockdown how have investors fared?

by LLB Editor
12th May 20 9:35 am

We’re now 50 days into lockdown in the UK, although for many of us it will feel like day 500, and during that time there has been some more positive news for investors following the bloodbath during the early part of March.

Markets have recovered some of the ground they lost, the vast majority of funds have delivered positive returns for investors, people have been buying more investments, and many companies have managed to raise cash.

Laura Suter, personal finance analyst at investment platform AJ Bell, comments: “The dark cloud hanging over investors during this time was the axe taken to billions of pounds of dividends, as businesses looked to conserve cash and slash payouts. So as we look forward to the gradual easing of lockdown, what has the first 50 days meant for investors?”

All major markets rose in lockdown

“All major markets have risen since lockdown began on 23 March, showing that despite the global uncertainty and reduced spending in the economy, the market at least thinks a lot of that is already priced in.

The lockdown period was preceded by mass falls in markets and since 23rd March these indices have rebounded. The smallest UK companies rose the most, with the FTSE AIM All Share increasing by 37% during the period, while the FTSE 250 rose by a slightly lower 25% and the FTSE 100 index climbed 19%.

In the FTSE 100 index six companies saw their share prices fall during the 50 days of lockdown, while in the FTSE 350 just 25 companies delivered an investment loss.

“Stateside companies climbed higher, with the S&P 500 index recording a 31% rise in the lockdown period despite death figures from Coronavirus climbing ever higher in the country. Even Asian markets rose, although by lower amounts, with Hong Kong’s Hang Seng index rising 12% and China’s SSE Composite inching forward 9%, as concerns about the country’s ability to rebound prevail.

But dividends everywhere were axed

“A total of 289 dividends were cut or deferred during lockdown, totalling £28.3bn of payouts that won’t be making their way to investors’ pockets. This included 41 FTSE 100 companies, leaving a large hole in income investors’ future payouts. Some equity income managers have predicted cuts to payouts from funds hitting 40% or more, with limited options left for income-seekers.

“The banking giants make up the largest cuts, with over £5bn of dividends cut at HSBC, £1.6bn at Lloyds and just over £1bn at Barclays. Royal Dutch Shell’s near £2bn dividend cut is among the largest and was one of the biggest shocks for investors’ portfolios.”

Largest dividend cuts during lockdown:

Date announced Company Value of dividend cut (£M)
31-Mar-20 HSBC £3,457
07-May-20 BT £3,348
31-Mar-20 Glencore £2,126
30-Apr-20 Royal Dutch Shell £1,979
28-Apr-20 HSBC (2) £1,627
31-Mar-20 Lloyds £1,576
31-Mar-20 Barclays £1,039
31-Mar-20 Royal Bank of Scotland £968
08-Apr-20 Aviva £839
TOTAL £16,959


Which funds were winners and losers?

“During the 50 days of lockdown there was some polarised performance among funds, but investors will find cheer that 98% of funds have made money for investors during that time – a sharp turnaround on the performance we saw just weeks before lockdown officially began when markets were in freefall. Gold funds topped the best performers during the period with ES Gold and Precious Metals delivering the highest return of 55.7%, as investors look to turn to gold in times of trouble, pushing up prices.

“Technology funds have been another standout – as this crisis has seen how technology has become integral to our everyday lives. Whether it’s through various video conferencing services allowing us to work and socialise, Netflix entertaining us with binge-worthy TV or Amazon delivering goods and stopping us having to go to the shops, these technology companies have prospered as they have become essential services for many. US-focused funds have also been among the top risers, fuelled in part by this technology boom but also by the sharp rebound in American markets after falls in February and early March.

“On the flip side, the 81 funds that have delivered a loss are dominated by property funds. The property market has all but ground to a halt during lockdown, meaning it’s almost impossible to accurately price the asset as no sales are happening. While lots of property funds remain suspended, meaning investors are trapped, that hasn’t stopped their values falling as managers write down the value of some assets.

However, the worst performer in the lockdown period was Neil Woodford’s former fund, now called LF Equity Income, which lost investors 16.7%. The illiquid and unlisted assets in the fund will likely have been hit by the wider market downturns, but this fall in value really reflects the fact that investors received some of their money back on 25th March after assets were sold off so isn’t a true reflection of performance.”

Best performing funds
Fund Performance (%)
ES – Gold and Precious Metals 55.71
Ninety One – Global Gold 54.13
BlackRock – Gold & General 53.81
MFM – Junior Gold 52.84
Quilter Investors – Precious Metals Equity 50.71
Baillie Gifford – American 49.08
Morgan Stanley – US Growth 48.75
Smith & Williamson – Global Gold & Resources 47.79
New Capital – US Future Leaders 46.69
DMS – Charteris Gold & Precious Metals 46.45
Schroder – ISF Global Energy 45.91
Goldman Sachs – North America Energy & Energy Infrastructure Equity Portfolio 45.54
LF Canada Life – Global Resource 44.9
MFM – Techinvest Special Situations 44.15
BlackRock – GF World Energy 43.78
BlackRock – GF World Mining 42.76
Mirabaud – UK Equity High Alpha 42.37
LF Miton – UK Smaller Companies 41.05
Morgan Stanley – US Advantage 40.03
MFM – Junior Oils Trust 39.2

Source: FE/AJ Bell

Worst performing funds
Fund Performance (%)
LF – Equity Income -16.73
ASI – Strategic Investment Allocation -15.66
First Arrow – Diversified -13.76
VT – Moray Place Investment Company -11.62
Aviva Investors – European Property -7.03
Canada Life – UK Property Jersey -6.8
Janus Henderson – Multi Asset Credit -6.6
Winton Trend -5.82
LF Canada Life – UK Property ACS -5.56
iShares – Overseas Government Bond Index -5.34
Kames – Property Income -5.09
Aviva Investors – UK Property -4.95
Janus Henderson Inst – Overseas Bond -4.4
Pictet TR – Atlas -4.37
Capital Group – Euro Bond (LUX) -4.26
Threadneedle – UK Property Authorised Investment -4.2
Threadneedle – Global Bond -4.2
Standard Life Investments – UK Real Estate -4.18
Scottish Widows – International Bond -4.13
Threadneedle European Bond -3.96

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