Funds that focus on energy companies have been especially badly hit by the market sell off.
Schroders’ £228m ISF Global Energy fund was already the UK’s worst performing retail fund of the year heading into the week, having lost 32.6 per cent since January, according to FE Trustnet, the data provider.
Its top 10 holdings, which made up more than half of the total portfolio, included several oil and gas companies that were pummelled on Monday. Its largest holding, Schlumberger Ltd, the London-listed oilfield services company, made up 6.9 per cent of the portfolio, but dropped more than 70 per cent on Monday.
Other big holdings in the fund included Toronto-listed gas company Ovintiv, which dropped 47 per cent, New York-listed Marathon Oil, which shed 41 per cent, and London-listed Wood Group, which fell 53 per cent.
Mark Lacey, Schroders’ head of commodities and manager of the Global Energy fund, said listed oil companies were “more fragile than at any time in the past 20 years”.
He added oil prices would rise much higher once stable demand returned. “For this stability, we need the Covid-19 coronavirus to dissipate, industrial activity to restart and industries to destock,” he said. “In the very short term it is hard to see this happening, but if we look beyond the short term, the upside risk to oil prices is significant.”
In the US, natural resources funds and energy funds had been the worst-performing investment products in the run-up to this week.
“With the [more than] 20 per cent decline in oil prices today, we can safely say that these classifications are getting crushed,” said Tom Roseen, head of Lipper Research at Refinitiv.
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