Two new funds in the table, as Baillie Gifford’s dominance wavers and passive investing picks up.
Little has changed from last month at the top of our most-bought funds table, which is based on the number of buys during the month by interactive investor customers. However, resurgent investor interest in small-caps, both in the UK and the US, is evident in two new entries.
Fundsmith Equity retained its place in the number one spot, with Terry Smith’s flagship fund also being the most-bought fund among interactive investor’s early bird ISA investors in this tax year (from 6 April to 19 April 2021).
Edinburgh-based fund house Baillie Gifford had dominated the most-bought funds’ list for months, but in April it had only three funds in the table, down from five in March and seven in February. Yet Baillie Gifford American stayed in third place, while Baillie Gifford Positive Change held on to fifth position. Growth-oriented Baillie Gifford American was recently in pole position in a list of funds that had consistently beaten the S&P 500 over three- and five-year periods. However, some argue that the strong performance of Baillie Gifford American could suffer as the market shifts from a growth style of investing to a value one.
- US funds that have consistently beaten the S&P 500
- Fund managers highly bullish, especially about US stocks
Baillie Gifford funds dominated interactive investor’s list of best-selling ISA investments in the 2020-21 tax year. Among the top 10 most-bought ISA investments in the last tax year was Baillie Gifford Global Discovery, which fell three places in April to the ninth spot. The fund, which invests in smaller companies, has among its top 10 holdings online real estate platform Zillow (NASDAQ:Z), lens manufacturer Staar Surgical Co (NASDAQ:STAA), and work marketplace Upwork (NASDAQ:UPWK). Its biggest exposures are to healthcare (33%), information technology (26%), and consumer discretionary (14.7%).
Meanwhile, Lee Qian, one of the Baillie Gifford Positive Change fund’s managers, spoke to us last month about the fund’s exposure to technology and discussed top holdings including Tesla (NASDAQ:TSLA), DexCom (NASDAQ:DXCM) and Moderna (NASDAQ:MRNA). Qian explained that: “Outperformance has been driven by the fundamental performance of the businesses we have invested in.” He also went into detail about two new holdings, and gave an example of a holding that is representative of each of the fund’s four themes; social inclusion and education, environment and resource needs, healthcare and quality of life, and ‘base of the pyramid’ (addressing the needs of the world’s poorest people).
- Baillie Gifford Positive Change: top shares and two new holdings
- Why this star fund backs ‘controversial’ Alphabet and Tesla
Perhaps encouraged by improving vaccine news and President Joe Biden’s $1.9 trillion coronavirus relief package, investors have been buying Artemis US Smaller Companies, which joined the table in 10th place. The fund is a member of interactive investor’s Super 60 rated list of investments and has been managed by Cormac Weldon, who was a recent guest on our Funds Fan podcast, since its launch in 2014. The fund manager told the podcast in late March that part of the reason he was optimistic about the US economy was owing to the fact that “we’ve got a number of vaccines improved within the US now, and we’ve got the Biden government aggressively rolling out the vaccines into the population. By summertime, it’s possible the US economy will be back functioning at a nice rate of growth, from which domestically focused companies will benefit disproportionately.”
Teodor Dilov, a fund analyst at interactive investor, recently had this to say about the US Smaller Companies fund: “Cormac Weldon runs a concentrated portfolio of typically between 40 to 60 small-cap companies (up to $10 billion in size). He starts by looking at the US economy to identify areas of the market that are benefiting from thematic trends, as well as those where conditions may not be favourable.”
At the time of writing, Artemis US Smaller Companies’ top 10 holdings include transportation company Saia (NASDAQ:SAIA), Churchill Downs (NASDAQ:CHDN), a firm that owns a number of casinos, and healthcare business Amedisys (NASDAQ:AMED). On a sector level, the fund has positions in industrials (33%), financials (20%), consumer discretionary (16%), healthcare (10%) and other areas.
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Investors who prefer to invest passively in the US bought Vanguard US Equity Index, which jumped four places to sixth place. The fund, another example of one of our Super 60 investments, is a low-cost option, with an ongoing charges figure of just 0.1%. The other passive funds in the table, namely Vanguard Life Strategy’s 100% Equity, 80% Equity and 60% Equity options, held their positions from last month in seventh, second and fourth places respectively. No doubt April’s top 10 table is also reflective of purchases made at the end of one ISA year and at the start of the 2021-22 tax year.
Marlborough Nano-Cap Growth, which is in the Investment Association’s UK Smaller Companies sector, was the other newcomer, entering the table in eighth place. According to research by interactive investor, the fund was one of the top 10 best performers during the pandemic (23 March 2020 to 15 March 2021). The fund, which was launched in 2013, was invested in 144 companies (at the time of writing) and its top 10 holdings include miner Jubilee Metals Group (LSE:JLP), wiring specialist Volex (LSE:VLX), and geospatial software and services provider IQGeo Group (LSE:IQG). The fund’s biggest sector exposures are to technology (27%), industrials (15%), consumer discretionary (12%) and financials (10%).
Top 10 most-popular investment funds: April 2021
|Rank||Fund||IA sector||Ranking change since previous month||1-year return to 4 May (%)||3-year return to 4 May (%)|
|1||Fundsmith Equity||Global||No change||26.8||65.3|
|2||Vanguard LifeStrategy 80% Equity||Mixed investment 40%-85% shares||No change||25.9||29.7|
|3||Baillie Gifford American||North America||No change||81.7||198.5|
|4||Vanguard LifeStrategy 60% Equity||Mixed investment 40%-85% shares||No change||18.7||25.1|
|5||Baillie Gifford Positive Change||Global||No change||65.6||145.3|
|6||Vanguard US Equity Index||North America||Up 4 places||39.9||62.8|
|7||Vanguard LifeStrategy 100% Equity||Global||No change||33.2||34|
|8||Marlborough Nano Cap Growth P Acc||UK Smaller Companies||New entry||93.9||79|
|9||Baillie Gifford Global Discovery||Global||Down 3 places||56.3||121.1|
|10||Artemis US Smaller Companies||North American Smaller Companies||New entry||54.6||83.7|
Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of April.
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