Investors continue to shun the UK market in favour of global and technology funds, according to Rebecca O’Keeffe, head of investment at interactive investor. Here are the funds everyone's buying.
September saw the US going ahead with a second round of tariffs on Chinese exports and an immediate retaliation from China. While the initial round of tariffs was broadly welcomed in the US, the latest round has seen a growing number of US companies now warning of rising consumer prices and downward pressure on profitability.
Despite this, US markets held up reasonably well during September, with the Dow and S&P up during the month, while the tech heavy Nasdaq generated a small loss.
The resilience of the US has been a benefit for the majority of interactive investor's top 10 most bought funds, which continue to be dominated by global funds, many of which have at least half their assets in US equities.
Meanwhile, UK investors continue to shun their home market overall, with just one UK fund making the top 10 list.
This trend has been seen right across the UK, with statistics from the Investment Association (IA) showing significant outflows of UK All-companies and Equity income funds, with the global sector the current most popular fund sector among retail investors.
Changes to most popular funds
Nine of August's top 10 remain favourites in September, with the usual two occupying their usual two top spots. Fundsmith Equity and Lindsell Train Global Equity show no sign of faltering in popularity and with both funds nearly doubling investor money over three years, their attraction is well founded.
The two Baillie Gifford funds, Global Discovery and American, swapped places over the month, but remain highly attractive for investors, with the American fund delivering a return of close to 50% over the past year and nearly 150% over the past three years.
While most of the big global funds have a sizeable percentage of their holdings in technology stocks, two of the top 10 are dedicated technology funds, which have been highly successful over the past few years.
Axa Framlington Global Technology is joined by Janus Henderson Global Technology, which has returned to the Top 10 after just missing the cut in August. Janus has just under 30% of its assets in Apple, Microsoft and Alphabet and over 80% of its holdings in US tech stocks. Axa Framlington's top three holdings of Alphabet, Apple and Facebook total more than 20%, while their US exposure is close to 90%.
US tech giants dominate the top holdings in both technology specific funds and wider global ones. The strength of the US market, in particular the astounding performance of some technology stocks, has caused some to question whether the US market may be reaching the end of its bull run.
While a fall is likely at some point, trying to second guess the top of the market has been a fool's errand so far, as the US market continues to outperform the majority of other geographic regions.
After entering the most bought list for the first time in August, the SDL UK Buffettology Fund has retained its place on the list and provided investors who want some UK exposure a good option.
The active management fee premium has certainly been worth it for the seven active funds on the list, but tracker funds are attractive to many investors who are trying to cut their investment costs.
The Vanguard LifeStrategy funds are hugely popular with self-directed investors, due to their simplicity and low charges, with each fund costing just 0.22% a year.
Most bought funds in September 2018
|Rank||Fund||IA sector||Previous Rank*|
|2||Lindsell Train Global Equity||Global||2|
|3||Baillie Gifford Global Discovery||Global||4|
|4||Baillie Gifford American||North American||3|
|5||Vanguard LifeStrategy 80% Equity||Mixed Investment 40%-85% Shares||5|
|6||AXA Global Technology||Technology & Telecommunications||6|
|7||Vanguard LifeStrategy 60% Equity||Mixed Investment 40%-85% Shares||7|
|8||Janus Henderson Global Technology||Technology & Telecommunications||Re-entry|
|9||SDL UK Buffettology||UK All Companies||9|
|10||Vanguard LifeStrategy 100% Equity||Global||8|
Source: interactive investor, 3 October 2018. Shows most bought funds by interactive investor's customers in September 2018.
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