UK equity funds led the way in July as investors smiled on Andy Burnham becoming prime minister; conversely, tech and emerging market darlings traded lower, data from FE Analytics shows.
It was a busy month domestically as Burnham took up residence at Number 10. On the economic front, GDP grew 0.1% in May, latest data shows, and 0.7% over the three months to the start of June, ahead of forecasts. Meanwhile, inflation fell back to 2.6% in June, although July's figures (due later this month) are expected to look worse after energy prices spiked once again.
Brent crude started July at $72 a barrel and is now more than $90, having topped $100 more than once over the course of the month as the ceasefire between the US and Iran ended and hostilities resumed.
Ben Yearsley, director at Fairview Investing, said UK equities serenely sailed through July, which was reflected in domestic funds performing strongly as a collective.
IA UK Equity Income topped the list of best-performing Investment Association (IA) sectors last month, up 4.3%. Narrowly behind was the IA UK All Companies peer group, up 4%, with IA UK Smaller Companies in fourth place, up 3.7%. IA Financials and Financial Innovation split the three.
Yearsley noted that the FTSE 100 hit an all-time high (10,989) during July, although it ended the month slightly off this level. Strong results from some of the UK's largest companies will also have helped. Oil major Shell, banking groups Standard Chartered, Lloyds and NatWest, and consumer staple Unilever all beat expectations.
However, he had a warning for some of those named above. "The banks (bearers of good news) had better watch out as new prime minister Burnham will surely be looking at ways of squeezing the pips even more to pay for his spending pledges," Yearsley said.
Source: FE Analytics
At the other end of the spectrum, it was a disastrous month for technology, with the average IA Technology & Technology Innovation fund down 7.3%.
Yearsley said: "What goes up must come back down. It's been a rocky few months for tech and maybe a breather is just what's needed. For those long-term investors, profits will still be great, but the shorter-term volatility has been huge."
Much of the damage came from the Far East, with the Korean index taking a hammering. The Kospi index dropped some 16.6% in July, although things had looked a lot worse before Friday. Sitting at a 29.7% loss for the month, on the final day of trading, the index rallied 18.6%, mitigating some of the losses.
Korean equities have more than doubled in the past year on the strength of large-cap semiconductor stocks SK Hynix and Samsung Electronics, which dominate the market.
This impacted IA Global Emerging Markets funds too, with the average fund in the sector down 6.3%. IA Asia Pacific Excluding Japan funds also struggled, down 4.8%.
It was also a poor month for bonds, with several fixed-income sectors making losses. Both the Bank of England and the Federal Reserve elected to hold rates in July, but the spike in the oil price led to higher yields.
The yield on a US 10-year treasury rose from 4.47% at the end of June to 4.73% today, while the 10-year gilt yield rose to 5.05% compared with 4.76% a month ago.
Turning to individual funds, while the UK sectors topped the table, there were few entrants in the top 20 best performers. Schroder UK Mid 250 was the only fund on the list below, up 10.2%.
Source: FE Analytics
Given the resurgence of oil, energy was the dominant theme, with SPDR MSCI Europe Energy UCITS ETF the best of the energy-themed performers. Guinness Global Energy was the top active fund, up 11.7%.
Notably, the £37M TM Brickwood Global Value, was in the top 20 funds last month. It is managed by Ben Whitmore, who left Jupiter Asset Management in 2024 where he ran more than £10bn to set up his new firm.
The downside, meanwhile, was dominated by China and Korea funds, both of which were hit hard by the tech-related sell-off.
In the land of investment trusts, the sector themes were broadly similar to the IA universe. Financials and UK equities performed well, although the IT Property UK Logistics sector topped the charts, up 5.4%.
Source: FE Analytics
Conversely, it was a poor month for IT Technology & Technology Innovation trusts, down 11.6%. The average constituent of the IT Hedge Funds sector also struggled, down 9.3%.
July was a good month for private equity trust 3i, which rebounded 15.2%, stemming losses so far in 2026. Much relies on the £31bn trust's largest holding, Action, which makes up almost three-quarters of the trust, and has been off the boil after warning of weakening sales.
It was also a strong month for other popular trusts, including Finsbury Growth & Income, Fidelity China Special Situations and RIT Capital Partners, as the table below shows.
Source: FE Analytics