“Esoteric” real estate finances the best performers in July

Real estate and index-linked bonds dominated both open and closed-end fund performance charts in July, as investors sought to hedge against rising inflation and pandemic problems.

The £ 52.59million Gravis UK Listed Property fund took first place, up 8.19% on the month, while NFU Mutual UK Property Shares and Aberdeen Standard UK Real Estate Share funds were also in the top spot. the mix, with a yield of 6.99% and 6.89%, respectively. .

In the closed space, the GCP Student Living tops the rankings, with a return of 31.37% during the month.

“Still a demand for real estate assets”

“The top four areas were all properties last month – yes, they may be more esoteric, but so what? The real estate securities sector led with an increase of 6.31%, followed by Property UK Logistics, Property UK Residential and Property UK Healthcare, ”said Ben Yearsley, investment consultant for Fairview Investing (pictured).

“It’s fair to say that with the malaise of the open-ended physical real estate industry (Bravo FCA for still being in your hands on this one), there is still a demand and a need for real estate assets. “

Indexed bond funds are doing well

Several index-linked bond funds were also among the top 10 open-ended funds, the best performing being the Axa Sterling Index Linked Bond, up 7.46% in July, securing fourth place in the rankings.

Others included the Janus Henderson Index Bond, the Fidelity UK Index Bond and the Insight UK Index Bond.

“Inflation is the number one economic concern and this month the Drewry World Container Index takes center stage (in this update anyway),” Yearsley said. “The Drewry Index basically measures the cost of moving goods to and from the United States, Europe and Asia. The index jumped this year. In fact, the cost of the current index of $ 9,330 (£ 6,698) is 368% higher than at the same time last year and is well over four times the average cost of the past five years.

China dominates worst performers

China-focused funds were the worst performers in July, with Invesco China Equity falling the most, returning -17.09%. Nine of the 10 funds included in the bottom 10 table focused on China, with the exception of the Morgan Stanley Developing Opportunities fund which lost 14.54%.

“China was the big story from a market perspective last month, with Beijing unexpectedly cracking down on parts of the education sector; stocks tumbled. It remains to be seen if this changes the long-term outlook for investing in China, or if it’s just part of the expected political risk of investing there, ”Yearsley said.

“Chinese equity markets were the worst performers in July, with the Hong Kong Hang Seng falling 9.58%; unsurprisingly, the MSCI Emerging Markets is also down. The FTSE was quite volatile in July, but overall it ended up 0.72%.

The importance of diversity

The main takeaway from July’s performance charts, according to Yearsley, is that diversity within portfolios is important.

“Few would have guessed that real estate, inflation-linked and long-term bonds would be the sectors to own. Many may have written off these asset classes and real estate has certainly had a lot of detractors over there. over the last 18 months, but it shows once again that you shouldn’t bet the ranch on one idea, one theme or one type of investment, ”he added.

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