Financial crisis defines fund leaders and laggards
LONDON (Reuters) - International financial turmoil surrounding Europe's sovereign debt crisis and worries about inflation shaped the rankings of fund performers with demand for commodities boosting natural resources funds into the top rank.
Four out of the top five performing equities funds available in Britain were natural resources or precious metals funds as investors fled to hard assets in an attempt to protect their wealth from inflationary pressures.
In contrast, funds exposed to southern European equities and bonds, feature prominently in the bottom ranks after suffering the full force of Europe's financial crisis.
Colin Moor, co manager of the Sunares Sustainable Natural Resources fund, which was the top performer in November returning 16.3 percent, said fears about the effects of monetary stimulus in the U.S was driving demand for precious metals.
"It's like an echo situation where fear leads investors to want to have gold then you also have the greedy investor coming along and wanting to be part of it so its feeding on itself a little bit," he said.
Moor attributed the fund's outperformance to a focus on gold and silver related equities. The prices of the physical assets have flirted with all time price highs in recent weeks.
Managers of precious metals and natural resources equities funds expect to continue to enjoy performance boosts from soaring commodity prices for the foreseeable future.
"Look at the level of monetary expansion and the debt level of householders. I'm neither a clairvoyant or an economist but if I look around more and I make an assessment of what this world is about at the moment, I am not overly convinced that precious metal prices will come down," said Markus Bachmann, manager of the $300 million Craton Capital Precious Metal Fund which ranked second in November.
In contrast, the bottom ranks among equities funds were dominated by those most exposed to southern European companies.
The biggest laggard in the survey was Fidelity's Iberia fund, which has large allocations to shares in Spanish banks such as Santander (SAN.MC) and BBVA (BBVA.MC), which both fell around 20 percent over the month.
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