UK Gilt Funds Lone Positive Performers In 'horror Show' March

The sector delivered a 1.6% return for the month, but this did not translate to strong performance for the Sterling Corporate Bond sector, which was rattled as investment grade spreads widened as the risk of defaults increased, FE fundinfo data shows.

Similarly, the High Yield sector saw a decline of over 14% for the month, while the IA Global Bond sector was helped by the fall in sterling and saw its decline limited to 3.6%.

Elsewhere, the 13.4% and 15.1% monthly declines for the FTSE 100 and FTSE All-Share indices respectively were bad news for UK equity funds, with the UK Smaller Companies, All Companies and Equity Income sectors hit with respective losses of 22.6%, 18.5% and 18.4%.

Conversely, the relatively subdued 6.2% loss for the Topix, as well as the fall in sterling, allowed the Japanese Smaller Companies and Japan sectors to limit falls to 2.9% and 3.4% respectively.

There was also relatively positive news for IA Direct Property funds, which have been hit with suspensions across the sector, as losses were limited to an average of 1.7% - the second best performing sector for the month.

At fund level, Barry Norris' Argonaut Absolute Return was the top performer, up 15% for the month, followed by VT LAMBDA Investment and Lindsell Train Japanese Equity B Sterling with gains of 11.2% and 10.5% respectively.

However, the ten worst performers each saw losses of at least 35%, with plummeting oil prices seeing Schroder ISF Global Energy and MFM Junior Oils Trust worst hit with losses of 44.6% and 37.8% respectively.

Director of Fairview Investing, which described March as a "horror show" from a fund perspective, Ben Yearsley said: "There were some bright spots last month, but they were few and far between.

"From an investment perspective sitting tight is likely the best strategy if your key assumption is for the spread of coronavirus to be brought under control in a reasonably short space of time, as has been the case in China.

"Many fund managers I have spoken to in the last week say there has been a decent pickup in economic activity in China as the economy re-starts and workers return to offices and factories."

Head of personal investing at Willis Owen Adrian Lowcock described March as "a month to forget for most investors", which were "caught by surprise" by the pandemic-induced sell-off.

He added: "In troubled times investors flock to safety, and the best performing sectors were those that investors see as defensive. U

"UK government gilts offered the only positive returns of all the IA sectors, as bond yields tumbled in anticipation of huge government support, and amid a desire to liquidate everything with any risk attached to it."

With regard to the relatively strong performance of property funds, Lowcock said this was "unlikely to be accurate and should effectively be ignored".

He added: "When they reopen the sector will likely face a double blow from investors who were locked in redeeming, and from tumbling property values."