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Best and worst performing investment sectors in 2019

Technology or Targeted Absolute Return? USA or UK? Find out which areas of investment did best and worst in 2019.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Jonathon Curtis, Investment Analyst

Published on 13 January 2020

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

2019 will likely be remembered by some investments going wrong. But while much of the financial press focused on funds gating, manager sackings and Brexit worries, most investments actually did rather well.

In fact, 2019 should go down as an excellent year for most investments. Every Investment Association (IA) sector made positive gains in 2019, and most saw double-digit growth. By comparison, in 2018 every sector bar one fell in value.

The tables below show the five best and worst performing sectors in 2019. Remember past performance isn’t a guide to the future. And as we’ll see in a moment, past performance can sometimes be one of the worst predictors of future returns.

All investments can fall as well as rise in value so you could get back less than you invest.

Scroll across to see the full tables

Best performing sectors 2019	% growth
Technology & Telecoms	29.4
UK Smaller Companies	26.2
North American Smaller Companies	25.7
North America	24.4
China/Greater China	22.9

Worst performing sectors 2019	% growth
Sterling Strategic Bond	8.9
UK Gilt	6.9
UK Index Linked Gilt	5.8
Global Bond	5.8
Targeted Absolute Return	4.6

Past performance is not a guide to the future. Source: Lipper IM to 31/12/2019

The Technology & Telecoms sector was the best performing sector in 2019. Much of that was down to the growth of large US tech firms, such as Apple and Microsoft. As technology companies make up a big part of the US stock markets, it should come as no surprise that the North America sector also had a strong year.

It wasn’t just American titans that did well though. North American smaller companies had an excellent year and actually came out just ahead of the broader North America sector. UK smaller companies performed strongly too, fuelled by easing Brexit worries and a stronger pound, given their higher exposure to the UK economy than larger companies.

The UK as a whole also did well and the UK All Companies sector was only just kept out of the top five by China. The China/Greater China sector was the worst performing of all IA sectors in 2018, but despite the ongoing trade spat with the US, was one of the strongest sectors in 2019. This goes to show what a poor indicator of future returns past performance can be.

At the other end of the rankings, Targeted Absolute Return delivered positive gains but was the weakest performer. Global and UK bonds also fell behind most other areas. These sectors have tended to do well when investors are cautious, but renewed investor optimism from US interest rate cuts meant that wasn’t the case in 2019. While these sectors’ gains would be viewed positively in many previous years, other sectors were much stronger.

Look before you leap

If that’s made you want to ditch your bonds and invest in US technology companies, consider this. Three of 2018’s top five performing sectors were in 2019’s bottom five. Two of the five worst performing sectors in 2018 were in the top five of 2019’s rankings – and the other three were in the top half.

Past performance really isn’t a guide to the future. The chart below shows how 2019’s highest-returning sectors did in 2018. If you’d invested 12 months ago based on 2018’s performance, it’s unlikely you would’ve had many of those sectors in your portfolio, and so their gains would have passed you by.

2019's top performing sectors vs 2018 returns

Past performance is not a guide to the future. Source: Lipper IM to 31/12/2019.

Mix it up

It’s almost impossible to know what fund, sector or region will do well from one period to the next. That’s why we think the best approach is a diversified one. Rather than try to guess what will top the charts over every short-term period, investing for the long-term across lots of different areas means you take out the guess work.

A truly diversified portfolio means at any particular time you could have some investments doing well and others not so. But we think that’s better than having a narrowly focused portfolio that may or may not be working, or trying to chase the chart-toppers but being one step behind the best returns.

The Wealth 50 is a list of our favourite funds across all the major sectors. They cover a range of investment styles so not all of them will do well at the same time. But that means you can build a truly diverse portfolio of your own to potentially prosper come rain or shine.

This article is not personal advice. If you are at all unsure of the suitability of an investment, please seek advice.

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