Against a difficult backdrop, only about a third of investment companies generated a positive share price return in 2022. However, masked by those numbers, was a sizeable rally over the last three months. The good news on US inflation, which has now fallen month-on-month for six months, is encouraging a recovery in the share prices of a range of growth-focused funds, presumably on hopes that interest rates will soon start to fall.

I cannot help feeling uneasy about this rally and even more so about the rally in Chinese equities which has accompanied the loosening of Covid restrictions. With 2023 looking hard to call, is it a good idea to run last year’s winners?

Amongst the big winners of 2022, were the aircraft-leasing funds, most of which lease A380s to Emirates. One trigger for a re-rating was Doric Nimrod Air One’s (DNA ) sale of its A380 aircraft to Emirates. The investment company plans to de-list shortly having returned the proceeds to shareholders.

The secondary market for these planes was not looking great before Covid, but the widespread grounding of aircraft dashed all hope. Amedeo Air Four (AA4 ), which at least had some diversification in the type of aircraft that it owned, had unfortunately leased them to Thai Airways, which went into bankruptcy.

Now, Thai is back operating Amedeo’s A350s and Emirates says that it wants to keep operating all of its remaining A380s probably until the mid-2030s. That implies Doric Nimrod Air Two (DNA2 ) may have the option of re-leasing its planes when their initial 12-year leases mature later this year and early next. My feeling is that returns from this part of the leasing sector will be less exciting this year.

Commodities and natural resources funds also did well, led by Riverstone Energy (RSE ). Like Riverstone Credit (RCOI ), another winner in 2022, Riverstone Energy now emphasises investments that support energy transition. Nevertheless, the bounce in the value of its legacy portfolio on the back of the jump in the oil price was a big contributor to returns. So too was the strength of the US dollar.

However, this has been unwinding since around the end of September, and given the inflation news, that seems likely to continue. The remarkable thing about Riverstone Energy, though, is that even after delivering NAV and share price performance of more than 40% last year, and despite a buy-back programme, it still trades wider than a 50% discount.

Elsewhere in that sector, BlackRock Energy and Resources (BERI ) and CQS Natural Resources Growth and Income (CNY ) also had a good year, and if the Chinese economy does recover and the US slowdown is mild, this sector could continue to make progress.

The latter trust can still be bought on a 17% discount. In December, its managers still favoured energy over other commodities, with just over a third of the portfolio in oil & gas. It also had around 10% in gold.

The gold price has been climbing recently, which could offer hope to one of last year’s laggards, Golden Prospect Precious Metals (GPS ).

Battery storage funds did well, with Harmony Energy Income (HEIT ) pulling off one of the few fundraises of the final quarter of the year, albeit raising just £15m. The wider renewable energy sector is embracing battery storage opportunities too. The main constraint to growth in this area is securing a grid connection for your asset. The dedicated storage funds have done well in this area, which should help underpin continued growth over 2023.

BH Macro (BHMG ), which thrives on volatility, was the best-performing listed hedge fund sector in the UK. My suspicion is that it will have further opportunities to continue to drive returns in 2023.

Gulf Investment Fund (GIF ) gave back some of its early gains in 2022 towards the end of the year. However, I think that it could do reasonably well in 2023, helped by its bias to Qatar, which is benefiting from soaring LNG exports.

Literacy Capital (BOOK ) was the standout winner in a generally out-of-favour private equity sector. I think it helped its cause coming to the market in June 2021 with a relatively mature portfolio, but real credit should go to fund managers Paul and Richard Pindar.

However, on a 6.5% premium above net asset value (NAV), Literacy Capital remains one of the most highly-rated funds in the private equity sector and, given the deep discounts that some other well-regarded funds are trading on, I would be tempted to go bargain hunting elsewhere.

In the UK, where the economic outlook is perhaps not as rosy, Rockwood Strategic (RKW ) proved a real winner in 2022. Given that much of the early part of the year was given over to disputes about its management contract, it would not have been my pick for the best-performing UK equity trust in 2022. However, a flurry of bids for portfolio companies helped spur on its NAV.

It seems to me that there will be more of the same in 2023. A weak pound and a general aversion to UK stocks mean that there are bargains to be had for foreign investors. Rockwood Strategic may not lead the pack again in 2023, but it could be up there alongside funds with similar strategies such as Odyssean (OIT ), North Atlantic Smaller (NAS ) and Strategic Equity Capital (SEC ).

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