One year after the first effective coronavirus vaccine was announced, UK smaller companies, Indian equity and commodity funds have generated the highest returns for their investors, FE fundinfo data shows. 
On 9 November 2020 – or ‘vaccine Monday’ – markets jumped when Pfizer announced successful Phase 3 trial results for its Covid vaccine. Several more vaccines were unveiled shortly after.
This sparked a rally in stock markets as investors priced in a credible way of tackling the coronavirus pandemic and the hope the global economy would soon be able to start recovering from the lockdowns that dominated 2020.
Performance of global equities since 9 Nov 2020
Source: FE Analytics
Since then, the MSCI AC World index has rallied more than 25% – driven by value stocks that are more cyclical (or driven by the health of the economy). But how has this translated into fund and trust returns?
FE Analytics shows the Investment Association sector to make the highest return since 9 November 2020 is the IA UK Smaller Companies, where the average fund is up 45.1%.
Strong performance here is down to a combination of smaller companies benefiting from confidence in the economic recovery and optimism in the UK following the resolution of Brexit at the start of the year.
IA India/Indian Subcontinent is in second place, after foreign buyers poured back into the country’s stocks as it recovered from the latest coronavirus wave.
IA Commodity/Natural Resources funds have performed strongly on the back of high demand and supply shortages, while IA European Smaller Companies, IA North American Smaller Companies and IA Financials and Financial Innovation reflect the cyclical rally since ‘vaccine Monday’.
Performance of Investment Association sectors since 9 Nov 2020
Source: FE Analytics
Sectors where the average fund has made a loss over the past year are mainly those that invest in bonds, reflecting the risk-on positioning of investors and concerns around higher inflation and interest rates.
The only equity peer group to lose money over the period is IA China/Greater China. Chinese equities have suffered in recent months after authorities launched a wide-ranging regulatory crackdown on areas such as the for-profit education sector, tech companies, real estate and video games.
Turning to individual funds, the strength of commodities over the past 12 months becomes clear, with the 11 highest-returning portfolios investing in energy stocks. Five of these are up more than 100%, with the iShares Oil & Gas Exploration & Production UCITS ETF gaining 135.3%.
Energy commodities have soared in price over recent months, with rising oil and gas prices being a contributing factor to the jump in inflation being witnessed across the globe. FE Analytics shows the S&P GSCI Brent Crude Spot is up 117% since ‘vaccine Monday’ and S&P GSCI Natural Gas Spot is up 64%.
Source: FE Analytics
Outside of energy funds, the above table highlights how the past year sparked a jump in cyclical and value investing.
Lyxor EURO STOXX Banks (DR) UCITS ETF, VT Cape Wrath Focus, SSGA SPDR MSCI USA Small Cap Value Weighted UCITS ETF, Guinness Global Money Managers and Alquity Indian Subcontinent are some of the funds reflecting this theme.
The heaviest losses since 9 November 2020 (apart from those from funds that have been closed and are being wound down) have come from gold portfolios.
While energy and other commodities have jumped in price over the past year, precious metals have struggled. The S&P GSCI Gold Spot index is down 10.2% over this period.
Owing to this, gold funds like Ninety One Global Gold, ES Baker Steel Gold & Precious Metals, iShares Gold Producers UCITS ETF, WS Charteris Gold & Precious Metals and SVS Sanlam Global Gold & Resources have lost more than 20%.
Performance of Association of Investment Companies sectors since 9 Nov 2020
Source: FE Analytics
When it comes to trusts, the best performing sector of the past year (excluding unclassified trusts and VCTs) was IT Commodities & Natural Resources with an average return of 70.2%.
Many of the trends seen in the open-ended fund universe can also be found among investment trusts, such as strong performance from the IT UK Smaller Companies and IT India sectors.
It’s also been a good year for IT Private Equity trusts, which have no equivalent among open-ended funds; the average return of 64.4% makes this the second highest returning investment trust sector.
IT China/Greater China has been the worst performer, with the average trust in this sector losing 17.5%.
Source: FE Analytics
Geiger Counter, which invests in companies involved in the exploration, development and production of energy from uranium, was the highest returning investment trust after making 316.7%. One of the positives behind the trust has been an increasing interest in nuclear power as governments around the globe commit to reducing carbon emissions.
One difference from open-ended funds is how many UK equity strategies there were among the 25 best performing trusts. Chelverton UK Dividend Trust, Aberforth Split Level Income Trust, River And Mercantile UK Micro Cap and Fidelity Special Values are some examples of UK trusts that have fared best since ‘vaccine Monday’.