African equity funds were one of the worst performers for the week through June 20. This came as the Nigerian naira plunged 29.5% against the US dollar after the Central Bank of Nigeria removed the currency’s 16-month peg to the greenback. The falling naira impacted the $111 million Templeton Africa A Acc € fund, down 3.9%; and the $270 million JPM Africa Equity A (acc) perf USD fund, down 2.7%. Both funds have 16.6% and 11.8% of assets invested in Nigeria, which has Africa’s largest economy. Common stock holdings include Nigeria’s largest brewer Nigerian Breweries and commercial bank Zenith Bank. Both stocks had a double-digit fall in Singapore dollar terms.

The British pound and UK equities staged a relief rally as momentum for the “Leave” camp stalled. This resulted in a recovery in UK-focused funds such as the $356 million Schroder ISF UK Equity A Acc fund, up 5.2%; and the $165 million Fidelity United Kingdom A-GBP fund, up 5.1%. European funds with UK exposure also gained. They include the $1.1 billion Fidelity European Larger Cos A-EUR equity fund, which has 38% invested in the UK, and the $30 million Franklin European Income A Acc EUR allocation fund.

The return of risk appetite gave emerging markets and the eurozone periphery stocks a lift. Brazilian equity funds, led by the $410 million HSBC GIF Brazil Equity AD fund, gained on hopes that the new administration will be able to restore confidence in Latin America’s largest economy. The $1.5 billion Fidelity Italy A-EUR fund also rose.

The worst performer was the $6.3 billion BGF World Gold A2 USD fund, which fell 4.1% despite a slight rise in gold prices. The fund also registered a steeper fall compared with its competitors, which fell between 0.6% and 1.3% over the week.

In the fixed income space, the stronger pound boosted funds hedged to the currency. Four of the top five performers were in this category. They include three PIMCO funds: the $6.3 billion PIMCO GIS Global Hi Yld Bd ins GBP Hdg I fund, the $1.6 billion PIMCO GIS Divers Inc Dur Hdg Inst£HdgAcc fund and the $8.3 billion PIMCO GIS Diversified Inc Inst GBPHdgAcc fund. The $5.9 billion SSgA GBP Liquidity I Stable NAV pound money market fund also benefited from the stronger currency, gaining 2.1%.

The US Federal Reserve also held interest rates steady. In a weekly commentary dated June 20, Black- Rock’s Richard Turnill says, “The Fed is balancing sustained consumption growth and rising inflation pressures against global growth risks and slowing jobs growth. The latter is winning the battle for now. We expect one or perhaps two Fed rate increases this year.” Turnill anticipates likely action by the Bank of Japan to ease the yen further in its July or September meeting. On June 20, the yen strengthened to 103.94 — its highest level against the US dollar since August 2014.

This article appeared in the Personal Wealth of Issue 734 (June 27) of The Edge Singapore.