All of the best performing open-ended funds since the start of 2020 have been those with significant exposure to US technology shares, according to data from FE Analytics.
The fund that benefitted the most from the tech shares rally in January was Baillie Gifford American, a £2.7bn fund that is jointly run by the firm’s head of US equities Tom Slater.
The fund returned 10 per cent in January, and has returned 186 per cent over the past five years, compared with 85 per cent for the average fund in the IA North America sector in that time period.
The fund’s largest holdings are Amazon and Tesla, both of which have risen significantly in value in light of recent corporate results during the past month. Amazon shares have risen from $1800 to $2000 over the past month.
Ben Yearsley, director at consultancy Fairview Investing, said the Baillie Gifford US fund now trades at a price to earnings multiple of 90, meaning it is only really suitable for investors with a long-term investment horizon.
He said: "Ballie Gifford American, almost a tech proxy, was the top performer rising 10.32 per cent. The fund is on PE of around 90; a long term view is needed with this one.
"Other tech and US funds made up the rest of the top five, long bonds dominated the balance of the top ten. The US economy grew by 2.3 per cent in 2019, the slowest rate since 2016 despite the labour market being strong and unemployment at the lowest rate for a generation. With the presidential election at the end of this year, President Trump won’t want these figures to get any worse."
The second best performing fund in January was Liontrust Global Technology, which was formerly known as Neptune Global Technology, and which returned 9 per cent over the past month.
This is a £64m fund run by Robin Geffen.
The fund’s largest investments are Microsoft, the share price of which has risen sharply over the past month, and Alphabet, the parent company of Google, the shares of which have also risen sharply.
The tech and telecoms sector was the best performing part of the market in January, returning 5 per cent.
The FTSE 100 lost 3.3 per cent during the month, as a stronger sterling hurts the FTSE 100. This is because about 70 per cent of the earnings of FTSE 100 companies come from overseas, and those earnings are worth less when sterling is rising in value relative to the currency in which those earnings were made.
david.thorpe@ft.com
What do you think about the issues raised by this story? Email us on fa.letters@ft.com to let us know.
