From Morningstar:

In 2023, the top-performing funds were those with a strong focus on tech, with Sector Equity Technology funds averaging a 31% return and US Large-Cap Growth Equity funds close behind with an average of 27%. The largest categories, mainly allocation strategies of different blends, all provided returns between 5-10% for investors.

On the other end of the spectrum, the worst performing funds were all investing in China, with China Equity – A Shares, China Equity, and Greater China Equity all averaging significant losses. Asia-focused funds and thematic equity categories like Infrastructure, Natural Resources, Agriculture, and Healthcare also struggled.

The fund with the best return in 2023 was Nikko AM ARK Disruptive Innovation, advised by ARK Investment Management, achieving a return of 59%. Only two of the best-performing 10 weren’t pure technology funds: Nikko AM ARK and PGIM Jennison US Growth. Jupiter India Select, with a 2023 return of 32%, was the top non-tech or US-focused fund.

Ben Yearsley, director at Fairview Investing, mentioned that the strong performance of tech funds in 2023, particularly the Nasdaq reaching an all-time high and the 5% interest rates, were surprising to many.

Chinese equity categories saw a particularly tough year, with abrdn China A Share Equity leading the bottom 10 funds, losing 29%. All of the bottom 10 funds lost more than 25%, and the bottom 40, all various Chinese equity funds.

In December 2023, the market saw a “Santa rally,” with the biotech and small-cap sectors dominating. Pictet-Biotech and Pictet-Biotech returned 18% and 13% in December. On the other hand, Chinese funds performed poorly in December, with JSS Equity – All China and Templeton China falling more than 5%.

Overall, 2023 was a good year for funds, particularly those focused on tech or US markets. However, Chinese equity categories struggled, and the tech funds performed surprisingly well, ending the year as one of the top performers.



Read more: The Best and Worst Performing UK Funds of 2023