Energy Sectors Decline in April; Real Estate Gains Significantly
Rotten Month for Energy Funds: A Rough Ride for Global Markets
In the whirlwind of April 2025, energy funds took a hit as the anticipated slackening of global growth sent oil prices plummeting. Here's a breakdown of how things panned out:
- Five energy funds snuggled up in the den of the 10 underperforming investment funds, boasting some company with two resource funds. Among them, Guinness Global Energy was the most downtrodden, sinking a hefty 13.5%.
- Carrying the weight of a tumbling Brent barrel, energy equities took a beating, as Ben Yearsley, director of Fairview Investing, aptly noted, "April saw energy shares getting walloped."
- Closer to the bottom of the April leaderboard, US-focused funds felt the brunt of the month, with North American Smaller Companies and the main North America sector falling by 5% and 4%, respectively.
- The tariff-laden China, however, reigned supreme among the losers, dropping an average of 7.5% throughout April after Donald Trump slapped 145% tariffs on the country.
On a brighter note, property funds put on a show in April, nabbing four of the top 10 spots. The dip in global growth sparks predicted faster rate cuts by central banks, with the European Central Bank pulling the trigger at its last meeting and the Bank of England poised to lower rates by 0.25% next week.
Yearsley commented, "The combination of Europe's interest rate cut and the strength in German bunds likely played a significant role in driving three European property funds into the top 10."
Similar success was seen across investment trust sectors in April, with property securities trusts growing a robust 7.7% and UK property trusts at a respectable 5%. Other winners included European bond funds, fueled by the precipitous fall in yields for German bunds, and Latin American funds, which thrived under a sharp slump in the US dollar.
Rounding things off, Yearsley added, "Although many assets took a beating early on, most losses were made good by April's end, barring China, where the economic impact of the trade tensions and slow global growth was more pronounced."
Insights:
- Behind the Banking Scene: With ongoing trade uncertainties and moderate growth forecasts, investment caution was justified, leading to subpar performances for US-focused funds [1][5].
- Trade Tussles Taming China: Being caught up in ongoing trade disputes, China's equity markets remained apprehensive, with Chinese funds feeling the heat [1][3].
- Property's Silver Lining: The search for safe havens during uncertain times might have led investors to gravitate toward property funds, thereby bolstering their performance [1][3].
- Wave of Sluggish Growth: The slackening global economic growth turned out to be friend or foe, benefiting some sectors like European and UK equities while creating setbacks for others like energy funds [1][3].
- Despite the rough ride in global markets, especially for energy funds, property funds managed to shine in April, securing four spots among the top 10, possibly due to investors seeking safe havens during uncertain times.
- In contrast to the performance of US-focused funds, which struggled in April, European property funds were boosted by the European Central Bank's interest rate cut and the strength in German bunds, earning them a place in the top 10.
- Amidst the sluggish growth sweeping across global markets, some sectors thrived, such as Latin American funds that benefited from a sharp slump in the US dollar, while others, like energy funds, faced setbacks, particularly in the context of plummeting oil prices.
