Gold shines as property and India lag: 2025’s best and worst funds

• Gold and precious metals funds sit at the top of the IA performance tables in 2025.
• UK property and Indian equity funds feature among the weakest performers.
• Wide dispersion across sectors and styles defined the year, reinforcing the importance of diversification and the potential appeal of out-of-favour areas looking ahead.

Kate Marshall, lead investment analyst, Hargreaves Lansdown:

“As the year draws to a close, investors are taking stock of a period marked by sharp contrasts across markets.

Looking at performance since the start of the year, the gap between the strongest and weakest Investment Association (IA) sectors has been striking – a reminder that markets rarely move in unison, and diversification remains critical.

Among individual funds, three gold-focused strategies are the strongest performers so far this year: SVS Baker Steel Gold & Precious Metals, Ninety One Global Gold, and WS Ruffer Gold.

At the other end of the spectrum, funds exposed to UK property and Indian equities have struggled, with TM Home Investor Fund, M&G Property Portfolio, and Invesco India Equity among the weakest performers within IA sectors.

Why gold has glittered

Gold-related funds have been buoyed by a combination of macroeconomic and geopolitical factors. A mix of political tension, shifting central bank policy, and concerns about the long-term health of the global economy pushed gold firmly back into the limelight.

In addition, central bank buying – particularly from emerging markets – has remained robust, helping to underpin prices. For miners and precious metals funds, this has translated into strong earnings momentum and investor interest, especially at a time when parts of the equity market have been dominated by a narrow group of mega-cap growth stocks.

Looking ahead, Goldman Sachs estimates that central banks will target around 20% of reserves in the precious metal, and China is currently at around 8%, which – alongside continued geopolitical uncertainty – should prop up the gold price, though we don’t expect the returns of this year, or last, to follow in 2026.

Property and India feel the pressure

In contrast, UK property funds have faced headwinds. Higher interest rates have pushed up financing costs and weighed on property valuations, while structural changes in demand – particularly for office space – have added further pressure.

India’s weaker performance has been more surprising to some investors, given its strong long-term growth story. However, after a period of standout returns, expectations were high and valuations stretched. That left the market vulnerable to a correction when sentiment shifted.

While uncomfortable, this kind of reset is not unusual after a strong run and does not undermine India’s longer-term potential. The potential for further dollar weakness can also create investment opportunities for firms with global revenues, and for emerging markets where debts are often denominated in dollars.

A year of dispersion – and a reminder on style

2025 has been characterised by wide dispersion – not just between regions and sectors, but also between investment styles. Areas that have dominated headlines, such as US mega-cap growth and AI-related stocks, have continued to attract capital, while more patient approaches, including some quality growth and diversified strategies, have been out of favour.

History suggests that periods like this can sow the seeds for future opportunities. When leadership becomes narrow and certain styles are left behind, investors willing to look beyond recent performance may find more attractive entry points for the year ahead.

As ever, past performance is no guide to future returns. But reviewing which areas surprised on the upside, and which disappointed, can be a valuable exercise. It highlights the importance of diversification and reminds investors that today’s laggards can sometimes become tomorrow’s leaders.”

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