The first half of 2022 has been tough for both experienced and novice investors with very few places to hide. However, it was possible to make money if you backed oil and gas producers and defensive stocks, among several other sectors.

Virtually nobody would have predicted that the UK’s FTSE 100 would have been the best performing major stock market index in the world, down just under 3% for the period.

In contrast, the domestically driven FTSE 250 was one of the worst performers, losing 20%, although it still fared better than the technology-heavy Nasdaq 100 index which dropped by almost a third.

The FTSE 100 benefited from its big exposure to commodities and energy companies. The oil and gas sector gained almost 30% as energy prices spiraled higher after Russia’s invasion of Ukraine.

Brent crude oil gained 39%, while the price of heating oil rocketed 64% and coal prices surged 145% after sanctions were imposed on Russian oil and gas.

Gold prices slipped 1%, leaving investors disappointed at an asset which has a reputation for being a hedge against inflation. Also letting investors down was bitcoin, dropping 59% in the first-half period. 

Reflecting its industrial use rather than haven status silver prices fell 17% while copper was down by a fifth, steel prices fell 40% and platinum was down 5%.

Retailers and leisure goods companies came under pressure from concerns over higher living costs dampening consumer expenditures with the two sectors dropping by a third in value.

With central banks pushing up interest rates bond investors also had a tough time with double-digit losses across government and corporate bond prices. This means government bonds have not provided their traditional diversification benefit.

Despite the carnage brought about by central banks and the war in Ukraine, traditionally defensive sectors performed well. Tobacco was up by 26%, healthcare advanced by 25% and telecoms gained 11%.

Crucially all three sectors have a good degree of pricing power which has become more important to combat rising costs.

The conflict in Ukraine boosted the aerospace and defence sector and propelled BAE Systems (BA.) to the top of the FTSE 350 with a gain of 51% over six months.

Performances across investment trusts mirrored sector trends. The technology focused Baillie Gifford US Growth Trust (USA) fell 52% while Scottish Mortgage (SMT) fell 47%.

Managers focused on protecting against inflation fared well with JPMorgan Global Core Real Assets (JARA) and JLEN Environmental (JLEN) both up 16%.

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