Best performing funds and investment trusts in January: Seraphim Space in top spot

Seraphim Space Investment Trust climbed to new heights in January, marking itself as the best performing investment trust of the month as its returns skyrocketed 49.4 per cent.

The trust, which invests in early-stage space technology firms, reversed losses in the latter part of 2023, which saw its share price fall by nearly half. 

The trust’s shares have been relatively turbulent, having also tumbled back in July 2023.

James Carthew, head of investment companies at QuotedData, told This is Money: ‘Seraphim Space Trust’s share price has been quite volatile, reflecting the relatively small number of shares that are actively traded as most investors at launch were in it for the long term and happy to sit tight.’

Shares in the investor in early stage space technology ventures surged in January

The strength of Seraphim comes despite the failure of Satellite Vu’s HotSat-1 climate satellite, which Seraphim helped the firm raise funds for, just six months into its orbit. 

Carthew noted that this news was somewhat mitigated by the satellite’s insurance protection.

Other top-performing investment trusts included Foresight Sustainable Forestry, which saw its return grow to 27.05 per cent in January. 

‘Growth-style investments have been doing better since it became clear that interest rates had peaked back in October 2023,’ Carthew said. 

‘January seems to have been the month when investors went hunting for bargains as many of the most out of favour trusts bounced strongly.’

Uranium-focused trust Geiger Counter also saw a strong return of 14.07 per cent.

When it came to funds, the technology and North America categories were the strongest sectors.

‘These two are so intertwined that it does distort the picture of US equities,’ Fairview Investing’s Ben Yearsley said. 

Technology based funds delivered an average return of 4.81 per cent, while the North America fund sector grew by 3.04 per cent.

Tech-focused Oxeye Hedged Income and Axiom Concentrated Global Growth, which is focused on North America, both delivered growth of over nine per cent.

The US market has continued to do well on the back of encouraging economic data,’ QuotedData senior analyst Matthew Read said, ‘Inflation is continuing to track down, but the economy still looks healthy – employment is holding up and there’s no sign of a recession at the moment – which gives the Fed room for interest rate cuts.’

Financial funds also delivered strong growth of 2.4 per cent in January. 

Japan and India-based funds also appeared in the five best performers, growing in value by 2.38 per cent and 1.81 per cent respectively.

Jupiter India delivered return of 8.74 per cent in January, while fellow Jupiter Asset Management fund, Jupiter India Select also returned 8.27 per cent.

Nomura Japan Strategic Value was also among the top ten performing funds, delivering return of 8.21 per cent.

On the other end of the spectrum, China funds have proved the weakest in January in a ‘very disappointing start to 2024,’ according to Yearsley.

‘According to many fund managers Chinese equities have never been this cheap compared to the wider Emerging Markets,’ he said.

The worst performer was Redwheel China Equity, which posted a return of -16.96 per cent.

Baillie Gifford China; JPM China; Guinness China A Share and Matthews China Small Companies all found their way into the worst ten performers list, posting returns of -13.42 per cent, -13.18 per cent, -12.66 per cent and -11.87 per cent respectively.

China’s downturn is largely due to its struggling property sector, which constitutes a quarter of the country’s economy.

The Chinese economy is suffering due to the hit of development giant Evergrande’s liquidation

Chinese development giant Evergrande has recently been forced into liquidation and is facing $300 billion of liabilities, while fears abound that its fellow property firm Country Garden could be the next to collapse.

‘China can’t seem to escape the doom loop – Beijing needs a big bang to pull markets from historic lows,’ Yearsley said.

Meanwhile, climate-related funds also suffered, continuing their six-month downturn.

Baillie Gifford Climate Optimism found itself facing a rather pessimistic outlook as it delivered a return of -16.75 per cent.

Active Solar similarly faced returns of -16.68 per cent, while GMO Climate Change Select and GMO Climate Change Investment were also amongst the worst performing funds, with returns at -12.31 per cent and -11.85 per cent respectively.