‘Turned £1,000 into £9’ – Savers lose billions as top Isa funds crash

Inflation: Victoria Scholar discusses rise in interest rates

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2022 will be a year most investors will want to forget as volatility struck and left few hiding places, said Nick Wood, head of fund research at wealth manager Quilter Cheviot.

Russia’s invasion of Ukraine, the energy shock, cost-of-living crisis, rocketing inflation and rising interest rates combined to savage global stock markets over the last year.

US technology stocks and smaller companies struggled, while Bitcoin and other cryptocurrencies were hammered.

Many of the worst performing investment funds were recent launches, that arrived on the market with disastrous timing, Wood said. “Fund launches often come at a time when the market for those investments is at its hottest”.

Investors must avoid the hype and must proceed with care, he added.

Savers have been encouraged to put their money into the stock market after more than a decade when cash offered next to nothing while US technology stocks such as Amazon, Apple and Tesla flew ever higher.

Many will now be reeling after seeing their holdings crash in the last 12 months, with some big name funds taking a severe beating.

JPM Emerging Europe Equity had a total meltdown falling an incredible 99.1 percent, Quilter Cheviot figures show.

That is a disaster for what is normally a highly respected fund manager. Its horrendous performance would have turned a £1,000 investment into just £9 in a single year.

Tech funds have also taken a complete beating with many falling by half.

T. Rowe Price Global Tech Equity crashed a staggering 50.9 percent over the year, while as we have previously reported, Baillie Gifford American plunged 50.1 percent.

Any investor who had £1,000 invested in either of these funds at the start of 2021 would have less than £500 today.

Morgan Stanley US Advantage was another poor performer falling 48.8 percent.

Wood said: “It is also hardly surprising to see some tech and US funds in the bottom 10 performers, with most being falling down to earth in the wake of a very successful period.”

Fund manager Fidelity, one of the most popular in the UK, had two of the top 10 worst performing investment funds in 2022.

Fidelity Emerging Europe Middle East & Africa fell 44.8 percent over the year, while Fidelity Duration 20 Feeder slumped 43.1 percent.

Liontrust Russia fell 60.1 percent but Wood said: “It is not a surprise to see funds with large amounts of exposure to Russia struggle as many marked those holdings down to zero.”

Two funds that invest in supposedly low-risk UK gilts also struggled, with CT Overseas Equity-Linked UK Gilt 3 and Janus Henderson Institutional Long Dated Gilt both down more than 40 percent. 

This followed the political chaos in the wake of ex-Chancellor Kwasi Kwarteng’s disastrous mini-Budget in September.

Another category of investment fund, known as investment trusts, also had a string of disasters.

JPMorgan Emerging Europe, Middle East & Africa was the worst performing investment trust of 2022, crashing 87.7 percent.

If somebody had invested £1,000 in the fund 12 months ago, their holdings would be worth just £123 today.

Another emerging market trust, Myanmar Investments, fell 69.9 per cent, turning £1,000 into just £301 over the year.

Two trusts that invest in early-stage private companies, Chrysalis Investments and the Schiehallion Fund, burned investors after falling 68.6 percent and 62.8 percent respectively.

A string of other trusts lost two thirds of their value, including Blue Planet IT, Seraphim Space, Molten Ventures, Seed Innovations, Jade Road Investments and Home REIT.

Victoria Scholar, head of investment at Interactive Investor, said investors should not necessarily sell funds that have performed badly for one year. “Monitor performance to see how they do in 2023. Long-term underperformance is a reason to sell.”

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