Top 10 most-popular investment funds: August 2022

Investors buy the dip, keep the faith in Baillie Gifford, and back a new fund.

Winter is coming and so is a recession, according to the Bank of England.

Inflation in the UK is at a 40-year high of 10.1% and Citigroup’s chief economist has predicted that the figure is likely to top 18% at the start of 2023, while Goldman Sachs has suggested it could even hit 22%. Meanwhile, investors await the Bank of England’s next interest rate decision on 15 September.

On Friday, Jerome Powell, chair of the US central bank the Federal Reserve, delivered a speech at the annual Jackson Hole conference in Wyoming, saying that “inflation has just about everyone’s attention right now”. Powell signalled that higher interest rates in the States would follow, as was widely anticipated, and added that “the historical record cautions strongly against prematurely loosening policy”.

• Read about our: Cashback Offers | Top Investment Funds | ii Super 60 Investments

Higher interest rates hit growth stocks hard since it means that it is more expensive for such firms to borrow money to expand, and because the valuations of these companies are based on their expected future earnings, which become relatively less valuable if investors can get a better return on their cash today.

Yet despite the clouds overhanging growth-oriented shares, funds and investment trusts, investors in Terry Smith’s Fundsmith Equity remain faithful tohis ‘quality growth style’ and Fundsmith Equity once again tops the most-bought list on the interactive investor platform, according to the number of ‘buys’ among customers in August.

Smith has been ‘buying the dip’ in markets and standing by his strategy. Retail investors are buying the dip themselves and other growth funds in our top 10 table include Baillie Gifford American, which has moved up to sixthplace. The American fund experienced a very short-term spike in performance during August, although it is the biggest ‘loser’ in our top 10 table over the year to date and is down -48.3%.

Saltydog Investor and interactive investor contributor Douglas Chadwick recently bought the actively managed fund, and another from the Baillie Gifford stable, and explains why in his latest article.

• The two Baillie Gifford funds we’ve just bought
• Will the ‘quality’ investing style of Terry Smith and Nick Train recover?

Dip buyers aside, investors stuck by their investment strategies in August and aside from one new entry to the top 10, little else has changed.

There are six passive funds in the table including growth play L&G Global Technology Index, in 10th place,and five Vanguard funds. Vanguard US Equity Index, up one place on last month, is in third place, whilethree funds from the low-cost multi-asset LifeStrategy range – the 100%,80%and60% Equity options – are in fourth, second and fifth place, respectively. The final fund from the leviathan fund house is Vanguard FTSE Global All Cap Index.

The new growth entrant, in eighth place, was Fidelity Global Technology, an equity fund with a 67% weighting to the US. The fund contains 98 holdings, according to its latest July factsheet, and has an ongoing charges figure of 1.03%.

Lead manager HyunHo Sohn, who was appointed to the fund in 2013, “employs a fundamental, bottom-up approach, focusing on identifying quality companies with sustainable growth prospects trading at attractive valuations”, according to Fidelity.

The fund top 10 includes familiar tech behemoths Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL), but also CRM (customer relationship management) tech firm Salesforce (NYSE:CRM), semiconductor business Texas Instruments (NASDAQ:TXN), and software firm Workday (NASDAQ:WDAY).

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Alternative assets fund FTF ClearBridge Global Infrastructure Income, in ninth place,remains popular among investors seeking diversification and inflation-linked income. The fund appears on interactive investor’s Super 60 investment ideas and, over the short term, it is the only fund in our top 10 that has delivered a significant positive return of 23.4% year to date. Over three years, it has returned 44.1% and over five years 64.4%.

The fund that exited the table in August was Vanguard FTSE Developed World ex-UK Equity Index.

Top 10 most-popular funds in August 2022

Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of August.