December's 10 most-bought funds

Neil Woodford's CF Woodford Equity Income was the most bought fund for the fifth consecutive month while HSBC and Vanguard-managed tracker funds attracted further inflows, according to Interactive Investor data.

Since its launch in June last year CF Woodford Equity Income has attracted over £2.6 billion in inflows as private investors have flocked to the celebrity manager's first eponymous fund.

With total assets under management of £4.3 billion, the fund is now the second largest in the Investment Association's (IA's) UK equity income sector.

In the six months to 8 January CF Woodford Equity Income returned 7.3%compared to 0.7%from the sector, while over three months the fund has returned 5.8%compared to 4.2%from the sector.

Tracker funds

However while some investors are being drawn by big names, an increasing number are choosing generic, lower-cost index trackers. During December a total of three index trackers featured in Interactive Investor's top 10; the highest number since October when four funds made the table for the first time.

Global multi-asset tracker Vanguard LifeStrategy 80% Equity was the fifth most-bought fund last month, rising from sixth in November, while HSBC's FTSE 250 Index tracker rose from 10th most-bought fund in November to seventh in December.

Both funds appear regularly in Interactive Investor's top 10, reflecting their strong performance. Over three years the Vanguard LifeStrategy 80% Equity fund has returned 38.5% compared to 30.1% from the IA mixed investment 40-85% shares sector, while HSBC's FTSE 250 Index has returned 68.3% compared to just 43% from the IA UK all companies sector over the same period.

Making a new entry into the top 10 is the Vanguard LifeStrategy 60% Equity tracker, which was the 10th most-bought fund in December. All of the index trackers boast low fees with the Vanguard funds charging just 0.24% while the HSBC FTSE 250 Index fund charges just 0.17%, compared to an average 0.75% charge for actively managed funds.

Also making its first appearance in Interactive Investor's top 10 most bought is MFM Slater Growth, which was the eighth most-bought fund in December. Launched in 2005 by Mark Slater, MFM Slater Growth has been a consistent outperformer, delivering first-quartile returns in six of the past nine years.

Over the past five years the £166 million fund has returned 152.4% compared to just 55% from the UK all companies sector, making it the second best-performing fund overall.

In 2014 the fund also delivered a sector-topping 17.6% compared to just 0.6% from the sector, perhaps explaining its newfound popularity among Interactive Investor users.

Favourites

Elsewhere the top 10 was occupied by longstanding favourites including Money Observer Rated Fund AXA Framlington Biotech, which rose from the fourth most-bought fund in November to the second most bought in December.

Despite the recent lacklustre market the fund has continued its astonishing run of performance, delivering 29% in the past three months alone and 53% over the past year.

Fellow Money Observer Rated Fund Fundsmith Equity held onto its place as the third most-bought fund in December for the second month in a row as its large overweight to the US continues to bolster its performance.

First State Asia Pacific Leaders - another Money Observer Rated Fund - fell from second most-bought fund in November to fourth in December as investors continue to pile into the £7.8 billion behemoth despite a hefty 4%initial charge.

Neil Woodford's former charge, Invesco Perpetual High Income, fell one place from fifth most-bought fund in November to sixth in December as the fund slipped into the second quartile of the UK all companies sector over one month with a loss of 1.2%.

Money Observer Rated Fund Artemis Global Income, which entered the top 10 for the first time in November, held on to its place as the ninth most-bought fund as manager Jacob de Tusch-Lec continues to deliver sector-beating returns.

Over three years the fund is the best performer in the IA global equity income sector, returning 74% compared to just 41% from the latter while over one year it has returned 15% compare to 8% from the sector.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.