It’s upsettingly easy to fixate on performance in the middle of a bear market. Many portfolios have plunged into the red over the course of the past few months, with the gains of recent years starting to ebb away. But there have been a few bright spots in the funds universe, including in the alternatives space. As I noted last week, the investment trusts that launched in the heady days of 2021 have mainly held up well thanks to their focus on well-positioned sectors, from shipping to different pockets of the renewables space.
On the other side of the coin, what worries me is just how niche you have had to go with your allocations to eke out positive returns in the past six months. Of some 50 Association of Investment Companies sectors just 15 have made a positive average return over that period, with not a single major equity category making the list. Instead, it tends to be some very focused plays – from Latin America to farmland, forestry, commodities and natural resources, leasing, structured finance, hedge funds, and music royalties – that are shoring up portfolios.
Exposure to various parts of the more established infrastructure and property sectors have also served investors well. This includes UK commercial property, generalist and renewable infrastructure and the healthcare Reits. The sector averages I’m looking at can mask some pretty mixed results among individual funds, but the general trend has been positive.