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Sell in May? Not this year…

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With the summer over, the Association of Investment Companies has launched a review of the year to date for the investment trust sector.

It said so far this year, the average investment trust is up 5%, with the majority of this growth coming between May and August. Indeed, anyone who ‘sold in May and went away’ – according to the old investment adage – would have lost out on 4% growth between 30 April and 31 August. The VCT sector performed even better, up 6% on average over the year to date.

Many of the top performing funds for the year to date are in those sectors seeing a period of recovery after more challenging times: This is particularly true for the Country Specialist, Asia Pacific and Global Emerging Markets sectors. The Asia Pacific sector is up 18% over the year to date (16% of this between May and August), staging a recovery after underperforming the wider investment company sector in 3 of the last 5 years. The Global Emerging Markets sector has also experienced a recovery, up 11%.

In contrast, it has been a tougher time for developed market sectors after a strong period of performance, with UK Smaller Companies, UK All Companies, European Smaller Companies and Japan having a more challenging year to date.

The trade association said some sectors had shown greater consistency: The Global Smaller Companies sector is the second top performing sector over the year to date, up 16%, and this sector has outperformed the wider investment company sector in 3 of the last 4 years. In contrast to some of the other top performing sectors over the year to date, only 4% of this growth came between May and August.

Annabel Brodie-Smith, Communications Director, Association of Investment Companies (AIC) said: “While St Ledger’s Day is still a few days away, it appears that while the City was sleeping over the quiet summer months, the stock market was disproving the ‘sell in May and go away adage’. On the whole, it has been a good summer for investment company performance.

“It is interesting to see that over the year to date, some of the Western focused sectors have experienced a tougher time after a strong run of performance, while many Asian and Emerging Markets focused sectors have seen their performance improving. In other words, there’s no telling where the stock market may take us. Investors will nevertheless be pleased to see some of the Asian and Global Emerging Markets sectors staging a recovery, especially given more challenging times in recent years. The message, once again, is plain and simple: investors need to keep a diversified portfolio.”

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