One theme leads the sectors, but specialist funds steal the show, explains Saltydog Investor.

After a reasonable start to the year, nearly all the Investment Association (IA) sectors suffered losses in March. Out of the 35 that we regularly monitor, only the two money market sectors ended the month unscathed.

Markets then rebounded, and most sectors performed well during April, May and June.

An escalation in the conflict in the Middle East, and increasing concerns about the economic consequences, weighed on investor sentiment during July. Only 13 out of the 35 sectors made gains.

However, last month the picture improved significantly, with 30 sectors making headway.

In July, the leading sector was UK Equity Income, with a one-month return of 4.3%. UK All Companies and UK Smaller Companies also performed well, rising by 3.9% and 3.6% respectively. The worst-performing sector was Technology & Technology Innovation, which fell by 6.7%.

Last month, the UK sectors continued to make positive progress, but dropped down the rankings. The star performer was Technology & Technology Innovation, which bounced back with a 5.3% return. The next best was the recently expanded Healthcare & Biotechnology sector, up 4.8%, followed by Asia Pacific Excluding Japan, which gained 3.1%.

Over the last couple of years, two themes have dominated financial markets.

One has been the rapid growth of artificial intelligence (AI), accelerated by the launch of OpenAI’s ChatGPT in late 2022. The other has been geopolitical uncertainty linked to Russia’s invasion of Ukraine, conflict in the Middle East and uncertainty surrounding US policy.

Both themes are clearly visible in our fund and sector analysis.

Funds in the Technology & Technology Innovation sector tend to have significant exposure to the large technology companies at the forefront of the AI revolution.

The sector had a slow start to this year, falling by 4.8% during the first quarter. It then rebounded strongly in the second quarter, gaining 35.6%, and by the end of August it was the best-performing IA sector of 2026.

It was also the leading sector last month. Within the sector, Pictet – RoboticsI GBP (BDB6DB9) led the way, up 11.7%. AXA Framlington Glbl Tech Fund – Z Acc (B4W52V5) gained 6.2%, while Fidelity Global Technology W-Acc-GBP (BJVDZ16) rose by 5.2%.

Another fund benefiting from increased demand for semiconductors is Barings Korea I GBP Acc (B9M3RQ4), from the Specialist sector. Its largest holdings include Samsung Electronics Co Ltd DR  SMSN 0.99% and SK hynix Inc ADR  SKHY 6.94%. It also performed well in August, rising by 12.5%.

However, although Technology & Technology Innovation was the best-performing sector in August, the month’s leading individual funds came from somewhere quite different.

Four of our top five funds were ‘gold’ funds from the Specialist sector.

Data source: Morningstar. Past performance is not a guide to future performance.

Unlike some exchange-traded funds (ETFs), which can invest directly in gold, these funds mainly hold shares in companies that mine and process gold and other precious metals. Their performance tends to reflect movements in the underlying gold price, although they can move much more dramatically, both on the way up and the way down.

The WS Amati Strategic Metals B Acc (BMD8NV6) fund has a broader remit and holds companies involved with a range of metals. However, a significant proportion of its portfolio is still linked to gold and silver miners.

Gold funds were the best-performing funds in 2025 and are now back on the move after a difficult few months.

The forces driving gold funds and technology funds are very different. Technology has benefited from enthusiasm for AI and rising demand for the infrastructure needed to support it. Gold has tended to benefit from geopolitical uncertainty and demand for assets perceived as safe havens.

That difference could also be useful to investors. The two areas are driven by different factors, so having some exposure to both could help diversify an investment portfolio.

For more information about Saltydog, or to take the two-month free trial, go to www.saltydoginvestor.com

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