Investments: best- and worst-performing funds, stocks and shares of 2021

Those who have backed smaller companies have had a great year so far. Here are the best- and worst-performing investments of 2021 so far.

Incredibly, we have already passed the halfway point of 2021, which makes it a good time to take a look back and review how our investments have performed and whether it’s time to make some changes.

So which investments have had the strongest start to 2021? The investment gurus at AJ Bell have crunched the numbers to identify the best- and worst-performing funds and shares.

Let’s start with funds, which are a particularly simple way to invest since your money is immediately diversified across a host of individual assets.

Here are the 10 funds which have enjoyed the most significant returns in the first half of 2021.

Best investment funds 2021

Investment fund	Percentage return in 2021 so far
CCM ‒ Intelligent Wealth	33.1%
Consistent ‒ Opportunities	32.6%
Guinness ‒ Global Energy	32.3%
Aberforth ‒ UK Small Companies	32%
Liontrust ‒ UK MicroCap	31.2%
CFP Castlefield ‒ B.E.S.T Sustainable UK Smaller Companies	29.3%
Aviva Inv ‒ UK Smaller Companies	29%
Guinness ‒ Global Money Managers	28.5%
VT ‒ De Lisle America	28.4%
Marlborough ‒ Nano Cap Growth	27.5%

What stands out here is the number of smaller company funds that figure in the list. It’s worth reflecting on the performance of the UK smaller companies market, which in the words of Laith Khalaf, financial analyst at AJ Bell, has enjoyed an “incredibly hot streak of performance”.

He isn’t overselling it either ‒ the index has repeatedly hit new record highs this year and is now around 20% higher than before the pandemic arrived, which is pretty impressive.

To put that into context, the next best performing sector was North America, which is up by 13% over the same period.

This is something of a vote of confidence in the UK economy according to Khalaf, with the smaller companies market enjoying greater exposure to domestic revenues than the big FTSE 100 index.

The reality is that the success of the vaccine rollout, and the fact that Brexit has not yet caused too much economic hardship, has resulted in a boost to the smaller companies market, and with it, funds that invest in this sector.

Khalaf also points out that is a sign of investors positioning themselves for a “risk-on market”.

This is a market where stocks are outperforming bonds, which are considered generally a less risky asset.

Now let’s take a look at the worst-performing funds.

Worst investment funds 2021

Investment fund	Percentage return in 2021 so far
Smith & Williamson ‒ Global Gold & Resources	-13%
LF Ruffer ‒ Gold	-13.1%
WS ‒ Charteris Gold & Precious Metals	-13.5%
Ninety One ‒ Global Gold	-13.8%
HSBC ‒ MSCI Indonesia	-14.3%
ES ‒ Baker Steel Gold & Precious Metals	-16.3%
iShares ‒ Global Clean Energy	-17.5%
HSBC ‒ MSCI Turkey	-21.3%
LF ‒ Equity Income	-33.3%

As you can see, that’s an awful lot of gold and metal related funds that have had a dodgy year to date.

Investing in shares

Of course, some investors have taken a different route, picking the individual stocks and shares they want to back.

The table below breaks down the big performers this year, and it’s notable how many familiar names are in there, with the likes of Royal Mail and BT doing extremely well.

Best-performing shares of 2021

Stock	Share performance in 2021 so far
Royal Mail Group	71%
Ashtead Group	56%
Entain	54%
BT Group	46.7%
Kingfisher	34.8%
Glencore	32.8%
St James’s Place	30.3%
Lloyds Banking Group	28.1%
Johnson Matthey	26.7%
Evraz	25.5%

As Khalaf points out, while these are long-standing names, they have moved with the times ‒ Royal Mail is benefitting from the vast numbers of online orders we’ve made over the last year, while BT owns the mobile network EE.

He also notes that Lloyds Bank is a perennial favourite with DIY investors, and while it’s had a strong year to date it’s still lower than its pre-pandemic level.

At the other end of the scale, here are the worst-performing stocks.

Worst-performing shares of 2021

Stock	Share performance in 2021 so far
Informa	-8.63%
Avast	-8.87%
Rolls Royce Group	-11.1%
London Stock Exchange Group	-11.5%
Ocado Group	-12.4%
Melrose Industries	-12.9%
Flutter Entertainment	-13%
Just Eat	-19%
Tesco	-23.9%
Fresnillo	-31.7%

This is quite a random group of businesses really, coupling those who benefitted particularly from lockdown but who have since performed less well with those that Khalaf described as “cyclical names that have failed to ignite demand, despite hopes for a global economic recovery”.

Have I missed the boat?

It’s very easy to see some of the more impressive returns here and feel the urge to snap up those top-performing funds and stocks, in the hopes of getting a slice of the pie.

But with investment, it’s really important to take a more long-term view.

These are the funds and stocks that we would all have benefitted from buying six months ago, but just because they have had a great year to date, that’s no guarantee that they will continue to over-perform in the year ahead.

The important thing to do is take lessons from why specific firms and sectors have done well and try to spot which firms and sectors are likely to enjoy their own boosted fortunes in 2022 and beyond.

Or, if that seems too risky, you can always go down the simple tracker route, investing in funds that merely track the performance of an actual index rather than trying to beat it.