Douglas Chadwick highlights the funds that have managed to make gains in March and observes that oil is not the only commodity passing through the Strait of Hormuz.

Since the start of the latest conflict with Iran, fewer than 2% of the funds that we include in our analysis have made gains.

In the first week of March, only three of the 34 Investment Association (IA) sectors that we track made positive returns. Standard Money Market edged up by 0.02%, while Short Term Money Market did marginally better, rising by 0.03%. The UK Direct Property sector also moved higher, gaining 0.4%.

Last week, it looks like four sectors made it over the line. The two Money Market sectors both went up by 0.04%. Latin America rose by 0.2%, and China/Greater China ended the week up 0.8%.

So, the only sectors that have risen in each of the past two weeks are the Money Markets. However, there are a few specific funds that have benefited from the recent conflict.

One of the main concerns facing investors is the rising price of oil and uncertainty over supply from the Middle East.

The scale of the US-Israeli attacks has been unprecedented, with hundreds of strikes targeting key military installations, nuclear-related infrastructure, oil facilities and command centres from Tehran to Bandar Abbas. Iran has responded with retaliatory attacks across the region, including strikes on oil and gas infrastructure in Saudi Arabia, the UAE, Qatar and Kuwait, sinking tankers in the Gulf, and attempts to mine and blockade the Strait of Hormuz.

This has caused oil prices to rise sharply since the hostilities began, with traders reacting quickly to the increased risk of supply disruption. Brent crude briefly rose above $100 a barrel for the first time in several years.

Last week, we highlighted three energy funds that were performing well before the war, but which will also have been boosted by the recent price rise. Last week they continued their upward trajectory.

Outside the Money Markets sectors, finding any other funds that have gone up is a challenge.

The effects of rising oil prices have been felt across the globe. However, Europe and Asia have been hit hardest due to their reliance on oil flows through the Strait of Hormuz. The US, on the other hand, is less dependent on supplies from the Middle East. Over the last decade, US shale production has transformed America into the world’s largest oil producer.

Although US stock markets have fallen in recent weeks, they have suffered less than most. There are a couple of US funds that have also proved relatively resilient. The Baillie Gifford American B Acc fund has only just dropped below breakeven month-to-date, and TM Natixis Loomis Sayles US Eq Ldrs I/A£ is marginally up.

The Pictet-Digital I dy GBP fund has also made a positive return over the past fortnight, as has the Pictet-Security I dy GBP fund.

At the end of last week, the Barings Global Agriculture I GBP fund picked up and was also showing a month-to-date gain. Oil is not the only commodity passing through the Strait of Hormuz. Roughly a third of the world’s nitrogen fertilisers and around 40–45% of sulphur exports, used to make phosphate fertilisers, pass through this narrow stretch of sea.

As we head into a critical spring planting season in the US and other northern hemisphere regions, demand for these products is rising just as supply risks increase. If the Strait remains blocked, this could be another fund worth watching.

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