Fundsmith, Vanguard returns, one new entry, and early bird ISA insights.
Investors are still favouring passive strategies, according to the number of ‘buys’ among our customer in April, but the number of active funds in the top 10 rose to two.
One of those active strategies - Terry Smith’s Fundsmith Equity, which is on interactive investor’s Super 60 list of investment ideas - still sits in pole position in the top 10 table. As my colleague Sam Benstead explains, the global growth fund got off to a good start in 2023 after its worst-ever performance in 2022, and he examines the stocks that have helped power performance.
Our in-house data reveals that early bird ISA investors have been buying Fundsmith Equity after its return to form. In the first two weeks of the new tax year, it was the third-most bought investment among ISA early birds, which is up three places compared to its position last year.
The other actively managed fund in April’s top 10 table was the low-risk Royal London Short Term Money Market fund, which entered in sixth place. It has a yearly ongoing charge of 0.10% and is currently yielding 4%.
The managers running money market funds can invest in different products, including short-dated government bonds. Returns on these cash-like investments increases as interest rates rise and allow cautious investors to earn income on their cash with minimal risk. The Bank of England base rate is currently 4.25%, with many expecting it to rise further to tackle persistent inflation.
- What have the ISA early birds been buying?
- Why Terry Smith’s performance has bounced back in 2023
- The low-risk fund we’ve bought to take advantage of rate rises
- The highest yielding money market funds to park your cash in
Money market funds can be held in a self-invested personal pension (SIPP), a stocks and shares ISA, or a general investment account. As my colleague Sam points out in a recent article on the highest yielding money market funds, since December 2021 the assets held by ii customers in money market funds, as well as the number of customers investing in the funds, has increased four-fold. Specialist writer Douglas Chadwick explains why the Saltydog portfolios hold money market funds in his most recent article.
However, active strategies were outnumbered by low-cost passive funds in April. Three LifeStrategy funds made the top 10, with the 80% Equity and 100% Equity options retaining second place and third place respectively, while the 60% Equity option fell one place to seventh.
In the same month, interactive investor published another interview in its ‘Day in the life’ series following the granting of exclusive access to Vanguard’s London office. The interview focuses on the multi-asset Vanguard LifeStrategy range and discusses possible returns for the funds over the next decade among other subjects.
Other funds from Vanguard’s stable in the top 10 included Vanguard FTSE Global All Cap Index (fourth); Vanguard US Equity Index (fifth); and Vanguard FTSE Dev World ex-UK Equity Index (eighth). The remaining two passive funds in the top 10 were HSBC FTSE All-World Index (ninth) and Fidelity Index World (10th).
The fund that exited the top 10 in April was Fidelity Index UK.
Top 10 most-popular funds in April 2023
|Rank||Fund||IA sector||Ranking change since previous month||1-year return to 1 May (%)||3-year return to 1 May (%)|
|1||Fundsmith Equity||Global||No change||5.97%||38.80%|
|2||Vanguard LifeStrategy 80% Equity||Mixed investment 40%-85% shares||No change||0.65%||29.60%|
|3||Vanguard LifeStrategy 100% Equity||Global||No change||2.80%||44.10%|
|4||Vanguard FTSE Global All Cap Index||Global||Up one||1.48%||43.30%|
|5||Vanguard US Equity Index||North America||Down one||0.84%||50.50%|
|6||Royal London Short Term Money Mkt||Short Term Money Market||New entry||2.54%||2.67%|
|7||Vanguard LifeStrategy 60% Equity||Mixed investment 40%-85% shares||Down one||-1.48%||16.48%|
|8||Vanguard FTSE Dev World ex-UK Equity Index||Global||Down one||2.87%||47.25%|
|9||HSBC FTSE All-World Index||Global||Up one||-0.02%||43.59%|
|10||Fidelity Index World||Global||Down one||0.89%||47.47%|
Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of April.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. 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.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Peter Spiller: ‘embarrassing’ discount will close soon and reward long-term investors