Revealed: the sectors and funds beating the market downturn for stocks and shares ISA investors!

Stock markets have been in freefall recently. But which funds have outperformed the market to deliver positive returns for stocks and shares ISA investors?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

An umbrella man and two men running in the rain stock illustration

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The last few months have been a roller coaster for investors. Stock markets have fallen due to the stream of negative news, from war in Ukraine to rising inflation and interest rates. With data from Trustnet revealing that 90% of funds have delivered negative returns over the last three months, it’s hard to know where to invest your stocks and shares ISA.

But what about the funds that have managed to buck the trend? Let’s take a look at the sectors and funds that have succeeded in delivering positive returns in the last three months.


Which sectors have beaten the market downturn?

These sectors delivered the highest growth according to the latest figures from Trustnet:

Top 5 sectors (IA)

Total return (last 3 months)

Latin America


UK Direct Property


Commodity/Natural Resources


Global EM Bonds (local currency)


UK Equity Income


Latin America was by far the highest-achieving sector, delivering growth of nearly 12%. What’s more, every fund in this sector delivered a positive return. Although, this comes after a disappointing sector performance in 2020 and 2021.

Similarly, every fund in the UK Direct Property sector has delivered a positive three-month return. Top of the pack was the Scottish Widows HIFML UK Property fund, with a return of 11%.

Of the remaining top five sectors, there were positive returns for around half of the Commodity and Natural Resources funds, over 90% of Global EM Bonds funds and 60% of UK Equity Income funds.

Which were the top-performing funds?

These were some of the highest-performing actively managed funds over the last three months, as reported by Trustnet:

Top 5 funds

Total return (last 3 months)

7IM Income Portfolio A


7IM Absolute Return Portfolio A


LF Brook Absolute Return Fund


BNY Mellon Brazil Equity


MFS Meridian Latin American Equity



1. 7IM Income Portfolio

Investors in this fund would have enjoyed a three-month return of over 40% and a 12-month return of 23%. And it’s been a consistent top-quartile performer against its peer group over the last five years too. It sits within the Mixed Investment 0-35% Shares sector, aiming to provide income and some long-term capital growth.

2. 7IM Absolute Return Portfolio

A second top-performer for 7IM, this fund aims to provide a positive capital return over a 12-month period, whatever the market conditions. It’s also delivered an impressive return of 40% in the last three months. But it’s only achieved a five-year return of 37%, mainly due to a 14% negative return in 2021.

3. LF Brook Absolute Return Fund

Another fund aiming to deliver positive 12-month capital growth, LF Brook Absolute Return Fund has delivered returns of 19% in the last three months. It’s also achieved a three-year return of nearly 74%, with a 29% return in 2020 alone.

4. BNY Mellon Brazil Equity

The BNY Mellon Brazil fund is at number four, with a three-month return of 17%. However, investors had a bumpy ride, suffering negative returns in 2020 and 2021.

5. MFS Meridian Latin American Equity

Also from the Latin American sector, this fund achieved a three-month return of over 16%. But it’s a volatile choice, with a positive return of 30% in 2019 followed by a loss of 17% in 2020.

What should you consider before investing?

Investors might see a recent fall in some fund prices as a buying opportunity for their stocks and shares ISAs. Or in a market downturn, it might signal the start of a period of underperformance relative to other sectors or funds.

Three of the top funds aimed to deliver modest capital growth whatever the market conditions. While they may not top the table in a bull market, they could be an attractive option in a market downturn.

The Latin American funds have delivered some strong returns. But due to the volatility of emerging markets funds, it’s been a roller coaster.

Our Foolish philosophy is to invest over the long term, which smooths out the upturns and downturns of stock markets. Investing across different sectors may also help to spread the risk of one fund or sector underperforming.

How can you invest using a Stocks and Shares ISA?

We’ve written a guide to stocks and shares ISAs that covers what you need to know about investing.

It’s worth taking the time to check the fees charged as they can add up to a substantial amount over time. If I invested £50,000 in an ISA which grew by 8% annually for 25 years, I’d pay an additional £9,000 in fees for an ISA with a 0.5% fee, compared to a 0.25% fee.

We’ve also produced a list of our top-rated providers of stocks and shares ISAs, based on our experts’ research of the market.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Personal Finance

Note paper with question mark on orange background
Personal Finance

Should you invest your ISA in a model portfolio?

Which model ISA portfolios offer both high performance and low fees? Hargreaves Lansdown, Interactive Investor and AJ Bell go under…

Read more »

Economic Uncertainty Ahead Sign With Stormy Background
Personal Finance

Is it time to exit emerging markets investments?

Investors may well be sitting on losses from emerging markets funds. Is it worth keeping the faith for a sustained…

Read more »

Personal Finance

Share trading? Three shares with turnaround potential

Share trading has been difficult in 2022, but which companies have turnaround potential? Jo Groves takes a closer look at…

Read more »

Man using credit card and smartphone for purchasing goods online.
Personal Finance

Revealed! Why Gen Z may be the savviest generation when it comes to credit cards

New research reveals that Gen Z may be the most astute when it comes to credit cards. But why? And…

Read more »

Environmental technology concept.
Personal Finance

The 10 best-performing sectors for ISA investors

The best-performing sectors over the past year invested in real assets such as infrastructure, but is this trend set to…

Read more »

Road sign warning of a risk ahead
Personal Finance

Recession risk ‘on the rise’: is it time for investors to worry?

A major global bank has suggested the risk of a recession in the UK is 'on the rise'. So, should…

Read more »

pensive bearded business man sitting on chair looking out of the window
Personal Finance

1 in 4 cutting back on investments amid cost of living crisis

New research shows one in four investors have cut back on their investing contributions to cope with the rising cost…

Read more »

Image of person checking their shares portfolio on mobile phone and computer
Personal Finance

The 10 most popular stocks among UK investors so far this year

As the new tax year kicks off, here's a look at some of the most popular stocks among UK investors…

Read more »