The winners and losers of 2016
A roundup of some of the best – and worst – investments of the year
Winners
The average British punter In a year of shocks, perhaps the greatest surprise for investors was that markets came through with so little damage, said Dan Mccrum in the FT. Indeed, the “typical diversified UK investor” is probably 10%20% richer this year. The collapse of sterling – which helped the FTSE 100 gain some 16% – was a factor. But who would have predicted “a worldwide bull market” for both stocks and bonds? The decisive factor was the year’s “first big shock” – the market mayhem in January, which persuaded investors that central banks would remain supportive. After that, they took successive political tremors in their stride. Stock markets Trump fervour helped propel the US Dow and the S&P 500 indices to record highs, making North America the second-best sector performer among UK investment trusts – up by an average of 34%. Most Asian markets also made solid gains. But the big profits were to be had in South America, said Seekingalpha.com: Brazil and Peru each put on 70% in the first nine months of 2016.
Commodities This year’s top-performing investment sector was Commodities and Natural Resources – which, after a challenging 2015, rose by a whopping 72%. Yet it was a frustrating year for gold investors, said Dominic Frisby on Moneyweek.com. The price soared in the first half, as investors took shelter. But by December, it had hit a tenmonth low of $1,135/oz. It ended the year only marginally up.
Losers
Sterling The pound slumped by more than 10% on the day after the referendum and continued to slide, hitting a 31-year low against the dollar in October, and falling to below $1.25 in December. To the chagrin of holidaymakers, sterling fared little better against the euro, dropping by around a fifth on the year before, said Patrick Collinson in The Guardian. By mid-august some bureaux de change “were giving less than s1 for £1”.
Art market Disappointing spring sales at Sotheby’s and Christie’s set the tone for the year. The most expensive painting sold was Claude Monet’s Haystack, which made $81.4m, said Carol Lewis in The Times. But according to the Knight Frank Luxury Investment Index, the value of art as an asset class fell 11% in the year to June. You’d have been better off with wine or classic cars, this year’s joint top alternative performers, up 8%.
Hedge funds Volatile markets are supposed to suit hedge funds, but that story became harder to believe in 2016. By the end of Q1, the average fund had lost 0.8%; things did not improve thereafter. The billionaire hedgie Crispin Odey reportedly made millions betting on the referendum, said Collinson. It didn’t help investors in his Odey Absolute Return Fund, which was the second worstperforming fund of the year, losing 15.7%. In fact, in 2016, “almost everything with the words ‘absolute return’ in their name turned into absolute rubbish”.