Funds with exposure to artificial intelligence, semiconductors and Asian markets bore the heaviest losses in the sell-off that closed last week, as several shocks sent growth and technology stocks sharply lower while defensive and income-oriented funds rose.
Markets were unsettled on Friday when the US Labor Department reported that employers added 172,000 jobs in May, roughly double economists' forecasts. Markets sold off as investors took this as pressure on the Federal Reserve to raise interest rates this year.
Neil Wilson, investor strategist at Saxo UK, said: "The trigger was a stronger-than-expected payroll employment report that backed up what I've been saying about resilience in the US labour market.
"The market was underestimating how soon the Fed could go ahead with raising interest rates. On Thursday I noted it was time for a pullback and cited potential volatility catalysts coming from not just the Middle East but a sooner-than-expected Fed tightening impulse and IPO crunch."
Another blow came from Broadcom after its AI chip revenue forecast missed expectations despite beating earnings. A third pressure came from new US tariff proposals, largely intended to replace a temporary global tariff set to expire on 24 July.
"Some of the froth is coming off the top of the AI trade here," Wilson said. "AI and semiconductor-linked stocks were sold but this was not a broad sell-off with consumer staples, healthcare, utilities, real estate and financials up on Friday."
Performance of global equities on Fri 5 Jun 2026
Source: FE Analytics. Total return in sterling.
The chart above shows how the MSCI AC World index fell 1.8% in sterling terms on Friday, although momentum and tech stocks came off much worse. Korea – home to some of chipmakers and semiconductor companies underpinning the AI revolution – was down 6.3%.
Nigel Green, chief executive of deVere Group, added: "What investors are witnessing is the first real macro shock of the AI era. Investors have been reminded that expectations can become so elevated that even a relatively modest disappointment can trigger a global repricing.
"AI is no longer behaving like a technology sector. It's now behaving like a macro asset class capable of moving markets, influencing capital flows and shaping investor sentiment across continents. The fact that one earnings report from California can trigger selling from Seoul to Silicon Valley within hours is an enormous wake-up call."
Performance of Investment Association sectors on Fri 5 Jun 2026
Source: FE Analytics. Total return in sterling.
Across the Investment Association universe, the IA Technology and Technology Innovation sector was hardest hit, with its average member down 2.01% while IA Asia Pacific Excluding Japan was close behind with a 1.99% decline. IA Global Emerging Markets lost 1.4%, IA Latin America 1.3% and IA China/Greater China 1.2%.
UK funds held up: the average IA UK All Companies fund rose 1.12%, IA UK Equity Income 1.15% and IA UK Smaller Companies added 1.16%. These were the only sectors up more than 1% on Friday, after the UK market's structural tilt towards financials, energy, consumer staples and healthcare made it a natural beneficiary of the rotation away from US growth.
The table above shows the 50 funds with the largest losses and several themes run through the list.
Source: FE Analytics. Total return in sterling.
The most heavily represented is AI and technology, with dedicated AI funds including Invesco Artificial Intelligence Enablers, L&G Artificial Intelligence and Xtrackers Artificial Intelligence and Big Data all appearing, alongside broad technology trackers such as Xtrackers MSCI USA Information Technology and iShares S&P 500 Information Technology.
Asia and Korea funds are another cluster. Wellington Asia Technology's 8.8% loss placed it second on the worst-hit list. Franklin FTSE Korea, HSBC MSCI Korea and iShares MSCI Korea reflect South Korea's heavy semiconductor weighting through Samsung and SK Hynix.
Clean energy funds suffered with First Trust Nasdaq Clean Edge Green Energy (the day's biggest faller) and iShares Global Clean Energy Transition falling in reflection of the sector's sensitivity to rate expectations. Clean energy projects are long-duration, capital-intensive assets whose valuations reprice sharply when rate-cut expectations evaporate.
UBS Solactive US Listed Gold & Silver Miners, Amundi Gold Miners and iShares Gold Producers also fell – as did the gold price. Gold is often sold in time of market stress as investors seek out easy sources of liquidity, while the yellow metal has become more volatile recently following its record-breaking gains in 2025.
Thematic and disruptive innovation funds round out the themes in the list of Friday's biggest fallers. Neuberger Next Generation Connectivity, Neuberger Next Generation Mobility, AMOVA ARK Disruptive Innovation and AXA World Funds Robotech all appear.
Source: FE Analytics. Total return in sterling.
However, some funds did post gains amid Friday's sell-off. UK equity funds dominate the top 25 as 14 of the days' best performers were UK-focused, spanning large-cap, smaller companies, income and ESG-tilted strategies. WS Lindsell Train UK Equity gained 2.5%, abrdn UK Value Equity rose 2.3% and IFSL Evenlode Income added 2.1%.
Healthcare funds also did well. AXA Framlington Health rose 2.9%, the best return of any fund on the day, while Schroder Global Healthcare, Invesco Global Health Care Innovation and AXA Framlington Biotech were among the best performers.
US consumer staples ETFs also appeared, with State Street SPDR U.S. Consumer Staples Select Sector, iShares S&P 500 Consumer Staples and Xtrackers MSCI USA Consumer Staples all gaining around 2.2% as investors rotated into more defensive sectors.