2023 was an interesting year for investors.
Economic data is still giving mixed signals. Inflation is either falling or holding steady, but unemployment’s staying low and wage increases are higher than their historical average.
Last year had its fair share of ups and downs, and towards the end of the year was a bit of an everything rally.
Share and bond prices went up with investors believing central banks were done with interest rate hikes. But since New Year, this trend has been stalling, with some shares and bonds losing money.
Here’s a look at which markets did best and worst over the quarter and the impact that’s had on mixed asset funds.
This article isn’t personal advice. If you’re not sure whether an investment is right for you, ask for financial advice. Investments and any income they produce can fall as well as rise in value, so you could get back less than you invest. Past performance isn’t a guide to the future.
How have stock markets performed?
Shares delivered positive returns over the three months to the end of January 2024, with the MSCI All Country World index growing 9.83%*.
Japanese shares performed well, with the MSCI Japan index returning 12.97%* over the same time. The worst performing index was MSCI China, losing 14.78%*.
The same has been true over the past 12 months. Japan was one of the best performing regions and China’s been weak, facing headwinds like weak economic growth, a liquidity crisis in its property sector and increased geopolitical tensions.
Remember though, these time periods are very short, and volatility should be expected.
How have bonds performed?
Interest rates and inflation are key reasons behind bond market losses since the start of 2022.
But the shift in investor expectations has seen bonds bouncing back. Expected lower interest rates and lower inflation are both good for bond returns.
The best performing bond sector over the three months to the end of January was the IA £ Strategic Bond sector, while the IA Index Linked Gilts sector performed the worst.
How have mixed assets and total bonds returns funds performed?
Funds invested more in shares than in bonds have seen better returns over the past five years. Funds in the IA Flexible Investment and IA Mixed Investment 40-85% Shares sectors performed best over this period because they generally invested more in shares.
This trend has kept going over the past year. But the performance difference between sectors has been smaller because different investments were in favour during different parts of what’s been a volatile year.
The best performing mixed-asset sector over the last 12 months was the IA Mixed Investment 40-85%, with performance of 4.46%*.
Funds in this sector don’t have many limitations on what they can invest in. They tend to be defensively minded and able to change their investments significantly if they want to.
The worst performing sector was the IA Mixed Investment 0-35% Shares sector. The average fund in this sector returned 2.69%*. These funds invest more in bonds which didn’t perform as well as shares during 2023.
Performance of mixed asset and total return sectors over 12 months
Annual percentage growth
Jan 19 - Jan 20 | Jan 20 - Jan 21 | Jan 21 - Jan 22 | Jan 22 - Jan 23 | Jan 23 - Jan 24 | |
|---|---|---|---|---|---|
MSCI China | 5.78% | 40.38% | -27.50% | -1.84% | -31.22% |
MSCI Japan | 11.40% | 10.71% | 0.14% | 2.06% | 15.00% |
IA £ Strategic Bond | 8.89% | 4.51% | -0.49% | -7.63% | 4.93% |
IA UK Index-Linked Gilt | 10.45% | 3.50% | 4.77% | -31.44% | -8.84% |
IA Flexible Investment | 11.09% | 7.09% | 6.21% | -1.27% | 3.88% |
IA Mixed Investment 0-35% Shares | 7.65% | 2.61% | 0.73% | -6.14% | 2.69% |
IA Mixed Investment 20-60% Shares | 9.28% | 3.13% | 4.45% | -4.00% | 3.26% |
IA Mixed Investment 40-85% Shares | 11.91% | 5.19% | 6.36% | -2.47% | 4.46% |
IA Targeted Absolute Return | 3.70% | 2.50% | 3.46% | 0.70% | 3.98% |
How have our wealth shortlist funds performed?
Our Wealth Shortlist funds have performed differently over the past 12 months. But with different approaches and objectives, we don’t expect them to perform in the same way.
Remember, 12 months is a short time when looking at investment has performance. Investments should be held as part of a diversified portfolio for the long term – at least five years.
Investing in these funds isn't right for everyone. Investors should only invest if the fund's objectives are aligned with their own, and there's a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
For more details on each fund and its risks, including charges, see the links to their factsheets and key investor information.
BNY Mellon Multi-Asset Balanced
BNY Mellon Multi-Asset Balanced was the strongest performing Wealth Shortlist fund in this sector over the past 12 months. It returned 8.17%**, well above its IA Mixed Investment 40-85% peer group average of 4.46%.
The fund invests in shares, bonds, and cash, but with a focus on shares. The shares part of the fund centres on the US, UK, and Europe.
Over the last 12 months, shares added the most value. With the amount invested in shares, it’s expected that this will have the biggest impact on overall fund performance.
Bonds also gained in value, but this lower portion invested in bonds means the gains had less of an impact on overall performance.
The manager can invest in emerging markets and derivatives, both of which add risk if used.
BNY Mellon Sustainable Real Return
BNY Mellon Sustainable Real Return was the worst performing Wealth Shortlist fund in the sector over the last 12 months. It returned –0.72%.
The managers try to give some shelter during market wobbles, while also delivering long-term growth.
It invests in a diversified set of shares, bonds and derivatives, with an emphasis on companies meeting it’s environmental, social and governance (ESG) criteria.
The managers use derivatives, aiming to add some stability to returns. However, this approach adds risk and over the last 12 months, derivatives have lost the most value, with investments in alternative assets also losing value.
Some of the fund’s investments in company shares and emerging market bonds added value, and we expect the fund to perform well over the long term.
The managers can invest in emerging markets and high-yield bonds, both of which add risk if used.
Annual percentage growth
Jan 19 – Jan 20 | Jan 20 – Jan 21 | Jan 21 – Jan 22 | Jan 22 – Jan 23 | Jan 23 – Jan 24 | |
|---|---|---|---|---|---|
BNY Mellon Multi-Asset Balanced | 16.93% | 5.60% | 11.94% | 2.40% | 8.17% |
IA Mixed Investment 40-85% Shares | 11.91% | 5.19% | 6.36% | -2.47% | 4.46% |
BNY Mellon Sustainable Real Return | 10.53% | 8.48% | 2.02% | -5.94% | -0.72% |
IA Targeted Absolute Return | 3.70% | 2.50% | 3.46% | 0.70% | 3.98% |