According to research from BMO Global Asset Management, the war in Ukraine, combined with broader economic crises, led to a record poor performance of funds worldwide in Q1, particularly in Europe.
As of the end of Q1 2022, only five (0.45 percent) of the 1,115 funds in the 12 sectors studied had consistently delivered top quartile returns over a three-year period, compared to 2.1 percent the previous quarter.
This is the lowest number recorded since the FundWatch survey began in 2008, and it is significantly lower than the historical average of 2% to 4%.
The Russian invasion of Ukraine and the subsequent global sanctions against Russia have had a significant impact on already rising bond yields and commodity prices.
The IA European Smaller Companies sector was the worst-performing of the five studied, falling 13.4% as the market felt the effects of its close geographic proximity to the war, Russian sanctions, and a regional reliance on Russian gas and oil.
With 11.8 percent of funds performing above median returns for three years in a row, the IA £ Corporate Bond sector was the most consistent, followed by the IA Asia Pacific ex-Japan with 10.8 percent of funds. The IA Europe ex-UK sector had the least consistent performance, with only one fund outperforming the average.
"The war in the Ukraine is the latest in market shocks, with the resulting sanctions having a significant impact on commodities, inflation and interest rates, as well as the impact at a sector level, with knock on effects for defence and energy stocks," said Rob Burdett, head of the Multi-Manager People team at BMO Global Asset Management (EMEA), part of Columbia Threadneedle Investments.
"The BMO research also found that the IA Latin American sector topped a table of IA sector averages, gaining 26.5% as the region benefitted from Russia’s position in the commodities markets being questioned."
By fLEXI tEAM