There was an ‘earthquake’ at the top of the table and a new entrant in a month that concluded with a Brexit deal.
Fundsmith Equity, Terry Smith’s global growth fund, was ousted from the top spot by Baillie Gifford American in December’s ranking of the top 10 most-bought funds, which is based on the number of buys during the month by interactive investor customers.
Smith’s fund had topped the table since June 2018, but Baillie Gifford American proved more popular in December, with investors drawn to its strong showing in 2020. The fund boasted an outstanding return of 121.8%, according to data from FE Analytics (1 January 2020 to 31 December 2020).
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The month’s momentous macro news of an eleventh-hour Brexit deal was announced very late in December, so time will tell whether this will improve sentiment towards UK funds. But, in December, investors continued to shun UK funds.
In addition, while investors are anticipating a recovery from the pandemic on the back of multiple vaccines against Covid-19, the world is not yet out of the woods, which is why retail investors continue to seek out funds such as Baillie Gifford American that tap into long-term investment trends. Online shopping, for example, is likely to continue to thrive after the pandemic passes and Baillie Gifford American holds stocks such as Amazon (NASDAQ:AMZN), Shopify (NYSE:SHOP) and Wayfair (NYSE:W) among its top holdings. A relatively recent newcomer to its top 10 is The Trade Desk (NASDAQ:TTD), a technology platform allowing clients to manage digital advertising campaigns.
Baillie Gifford funds accounted for an impressive seven of the 10 places in December’s most-bought list and some of its funds were among the best performers of 2020, according to analysis carried out in early December. These funds include Baillie Gifford Positive Change (third), Baillie Gifford Global Discovery (fifth) and Baillie Gifford Long Term Global Growth (ninth place).
Baillie Gifford Positive Change counts Covid-19 vaccine producer Moderna (NASDAQ:MRNA) among its top 10 holdings, with healthcare tipped as likely to be the best-performing sector of the market during 2021 by one in five fund managers in a recent survey.
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Baillie Gifford Managed, a multi-asset fund, entered the table in 10th place last month. Among its top 10 holdings are Zalando (XETRA:ZAL), an online fashion platform, IMCD (EURONEXT:IMCD), which manufactures and sells chemicals and food ingredients, and miner BHP (LSE:BHP). The actively managed fund’s largest exposure is to the US (20%), followed by Europe (18%) and the UK (17%). The fund is highly diversified, with a top 10 that accounts for just 13% of assets. Its charges are attractively low for a multi-asset offering at 0.42%.
The remaining two Baillie Gifford funds in the table are Baillie Gifford Pacific, up one place to sixth place since last month, and Baillie Gifford China, which has fallen four places to seventh place. These funds are likely to continue to find favour among investors, owing to China’s speedy recovery from the pandemic.
Two Vanguard funds from its low-cost LifeStrategy range, Vanguard 80% Equity and Vanguard 60% Equity, in fourth and eighth place, respectively, are the only passive investments in December’s ranking. The two funds form part of interactive investor’s quick-start funds selection.
Top 10 most popular funds: December 2020
|Rank||Fund||IA sector||Ranking change since previous month||1-year return to 4 Jan (%)||3-year return to 4 Jan (%)|
|1||Baillie Gifford American||North America||+1||121.8%||219%|
|2||Fundsmith Equity||Global||- 1||18.4%||52.3%|
|3||Baillie Gifford Positive Change||Global||+ 1||80%||138.8%|
|4||Vanguard LifeStrategy 80% Equity||Mixed investment 40%-85% shares||+1||7.6%||22%|
|5||Baillie Gifford Global Discovery||Global||+1||76.8%||129.4%|
|6||Baillie Gifford Pacific||Asia Pacific Excluding Japan||+1||60.3%||74.7%|
|7||Baillie Gifford China||China||-4||55.9%||64.5%|
|8||Vanguard LifeStrategy 60% Equity||Mixed investment 40%-85% shares||No change||7.8%||20.4%|
|9||Baillie Gifford Long-Term Global Growth||Global||No change||95.6%||162.6%|
|10||Baillie Gifford Managed||Mixed Investment 40-85% Shares||New entry||33.8%||58.1%|
Source: interactive investor and FE Analytics. Note: the top 10 is based on the number of “buys” during the month of December.
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