Brexit: Japan and gold on top

That is no surprise, with the FTSE 250 shouldering the brunt of the impact of the referendum in the immediate aftermath of the vote, falling 12 per cent in early trading on 24 June, its biggest single-session loss on record. Investors piled out of funds exposed to UK smaller companies, which derive earnings from the domestic economy.

Investec UK Smaller Companies (GB00B00LDP80), Franklin UK Smaller Companies (GB00B7FFF708) and JPM UK Smaller Companies (GB00B84LQR33) are now down the most of all IA UK Smaller Companies funds. Investec is now down 13.7 per cent over the month. In the AIC UK Smaller Companies sector, JPMorgan Smaller Companies (JMI) was among the worst hit – down 13.4 per cent - while Henderson Smaller Companies Investment Trust (HSL) was also feeling the pain.

Property funds have also been hit, with investment trusts invested in property or property securities affected due to concerns over the country's property market.

However, the worst affected open-ended funds – those residing in the IA UK Smaller Companies, UK All Companies and UK Equity Income sectors – are still down by less than 5 per cent on average. The average UK Equity Income fund only fell by 3.1 per cent between 23-30 June. Many of those funds invest in large, internationally-facing stocks within the FTSE 100, which has surged in recent days. Only a week after the vote the FTSE has already rebounded to pre-Brexit levels and the worst sold-off stocks are rebounding after a spate of buying from bargain-seeking investors.

Meanwhile, anyone owning Latin American, Japenese or Asia-Pacific closed-end funds will be feeling smug, as well as those invested in IA Japanese Smaller Companies funds, Greater China funds or Asia Pacific funds – which have all returned between 9 and 14 per cent in just one week. Invesco Perpetual Japanese Smaller Companies (GB00B8N46G29) is up 20.2 per cent in just one month.

A major part of the outperformance of overseas equity funds is due to sterling’s weakness against other currencies. Most of them are priced in currencies which strengthened against the pound following the vote, flattering their returns.

Any fund invested in gold has also performed well following the vote, as investors seeking safety surged into the precious metal. UBS Solactive Global Pure Gold Miners UCITs ETF (A Dis) (UC53) is now up 35.5 per cent over one month and iShares Gold Producers (SPGP) is up 32 per cent.

Ben Yearsley, investment director at Wealth Club, says: “Whilst investors shouldn’t pay attention to very short-term performance numbers, the past week has seen a real divergence, mainly due to the collapse in sterling boosting the value of overseas investments.

“Gold funds and Japanese funds make up the top five performers over the past week. Gold has benefited from the strength of the US dollar versus sterling and also a flight to safety and an increase in the gold price. Standard Life funds have had a torrid week with three of their funds in the bottom five. And from a sector perspective, Asia, Japan and Emerging Markets fill the top five, whilst UK Smaller Companies prop up the weekly numbers as this sector is seen as the most UK-focused and at risk from Brexit.”

Brexit: The fund impact