10 most-bought funds and trusts: Smith and Woodford in the mix

Brexit has made UK-focused funds and trusts unpopular, so no surprise to see investors on the interactive investor platform piling into these big players. Jemma Jackson names them here.

Given there has been a shortage of winners in 2018, it seems that many investors are looking to star names, and both brand and size seem to matter, too, according to the top 10 November picks on the interactive investor platform for investment trusts and funds.

Investment trusts

Half of the most bought investment trusts formed something of a 'billion club', with total assets* of at least one billion pounds. Given that only 11% of investment trusts weigh in at £1 billion plus, this is noteworthy. 

Scottish Mortgage, with assets of £7.6 billion and the largest company in the sector, continues to top the list, with Polar Capital Technology (£1.7 billion), City of London (£1.5 billion), Finsbury Growth and Income (£1.3bn), and Fidelity China Special Situations (£1.3 billion) all featuring.

Meanwhile, two other investment trust heavyweights – both in size and brand, also made the top 10 - Smithson Investment Trust (£824 million), for the second month in a row since launch, and the £947 million Woodford Patient Capital after a period of absence. 

For the first time, Baillie Gifford UK Growth has appeared in the investment trust rankings. The trust, previously managed by Schroders, was taken over by Baillie Gifford earlier in the year, suggesting the pull of the Baillie Gifford brand is strong.

Funds - bagging a star

Once again Fundsmith Equity, run by Terry Smith, takes top position. Second was another global fund managed by another star name - Lindsell Train Global Equity, managed by Nick Train, Michael Lindsell and James Bullock.  The other global fund in the top 10 is Baillie Gifford Global Discovery.

Rebecca O'Keeffe, head of investment, interactive investor, said: "The majority of our most popular funds and trusts are heavily exposed to the US markets and the technology sector in particular. 

"After the sharp decline in October, US equity markets remained extremely volatile throughout November.  For the month as a whole, however, valuations ended broadly unchanged as Trump softened his stance on trade and markets began to feel that the Fed might soon reach neutral, with the growing potential for a pause in 2019.

"This more dovish Fed outlook helped Emerging markets, which performed well during November as investors perceived that the Fed-induced liquidity squeeze might soon come to an end."

It is perhaps no surprise, given the Brexit political drama, to see the UK getting the cold shoulder. Only two funds in the top 10 have a UK focus, with investors again looking to star names to get them through, or those who seek to replicate star strategies. In some cases, it is a little bit of both. 

One of these was LF Lindsell Train UK Equity, also managed by Nick Train, and an ardent fan of Warren Buffett's approach. The other UK fund in the top 10 was CFP SDL UK Buffettology, which seeks to replicate Warren Buffett's legendary approach, climbing from tenth to fifth place.

O'Keeffe said: “The continued Brexit saga has seen investors actively ignoring the UK market, instead preferring to look more globally. That said, on a relative valuation basis, UK equities are inexpensive, so those who are more optimistic about Brexit prospects, or simply see value here are beginning to look at the UK as a potential opportunity.

"However, in November, the UK market did nothing to help restore its reputation. Here investors were faced with an apparent choice between a bad and a catastrophic Brexit.  It is no surprise, then, for the market to have spent much of November speculating as to which UK-focused companies would be most vulnerable to the increasingly vicious withdrawal of liquidity affecting the UK credit market.

"Extrapolating these trends may be the reason that Bank of England governor Carney is so worried about the potentially disastrous effects of a hard Brexit on the UK economy."

Elsewhere, Jupiter India is a new entrant to the list – a sign that investors are viewing India as offering up some value following a rough patch in 2018 owing to the high oil price, which has essentially been a tax rise for India's energy-intensive economy. The strong dollar also didn't help. 

Most bought investment trusts

Source: interactive investor

Most bought funds

Source: interactive investor

*Total assets data for the investment trusts mentioned is to 31 October 2018 and is source: AIC.