Interactive Investor

Top 10 most-popular investment funds: December 2021

4th January 2022 15:42

Nina Kelly from interactive investor

Change at the top, a new fund enters the top 10, and divergent paths for Baillie Gifford and Vanguard.

Passive funds accounted for six entries in our December top 10 table, up from five the previous month, according to monthly data on the most-bought funds on the interactive investor platform.

Of those funds, five are from the Vanguard stable, including a new entry in 10th place, Vanguard FTSE Global All Cap Index. This tracker fund was one of the top 20 bestselling funds of 2021 on the interactive investor platform, ranked in 14th place overall. As of 30 November, the fund, which was established in 2016, offered investors exposure to 7,165 stocks for an ongoing charge figure (OCF) of 0.23%. As its name suggests, the fund tracks the performance of the FTSE Global All Cap Index, which is made up of large, mid-sized and small company shares in both developed and emerging markets. Its largest weighting at the time of writing is to the US (63.1%), followed by Europe (16%). Apple (NASDAQ:AAPL), which has just become the world’s first $3 trillion company, is the top holding followed by other US tech mega-caps including Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN).

Other global strategies continued to prove popular among ii customers in December with Terry Smith’s Fundsmith Equity and Rathbone Global Opportunities in first and sixth place respectively, amid a backdrop of rising inflation and interest rates. In Fundsmith’s portfolio comment for December, the fund manager said that the top five contributors in the month were medtech firm Stryker (NYSE:SYK), Estee Lauder (NYSE:EL), McCormick (NYSE:MKC.V), Philip Morris (NYSE:PM) and Visa (NYSE:V), while the top five detractors were Intuit (NASDAQ:INTU), Amazon, Nike (NYSE:NKE), spirt and wine company Brown-Forman (NYSE:BF.A), and Microsoft. Fundsmith also reported that it exited an as-yet-undisclosed position during the month.

Baillie Gifford’s ethical fund Positive Change, which was one of the top contributors to the performance of the ii Ethical Growth Portfolio in 2021, slipped out of the top three to fourth place after another passive fund, L&G Global Technology Index, rose one place on the previous month. The L&G fund was one of the best-performing funds of the year with a return of 34.75% (1 January – 30 November 2021). Our Saltydog analyst Douglas Chadwick identified it as one of the top performers in his higher-risk ‘Full Steam Ahead Emerging’ funds group. You can read about these groups and the Saltydog methodology here. It is perhaps not surprising that a tech fund such as the L&G one has experienced a surge in popularity after a return to working from home amid the spread of the Omicron variant as the Covid pandemic enters its third year.

Returning to Vanguard, its LifeStrategy 80% Equity fund, which remained in second place in December, was also the second-most bought fund of 2021. It was another fund highlighted by Douglas Chadwick as one of the top five funds of the year in his 'Slow Ahead' group. Vanguard LifeStrategy sister funds, the 60% Equity option, and the 100% Equity option, were in fifth and eighth place respectively in December.

Three funds from Vanguard’s LifeStrategy stable (80%, 60% and 20%) are part of interactive investor’s Quick-start funds range aimed at beginners. Last month, Vanguard announced the launch of the Vanguard SustainableLife range, an ethical alternative to its popular LifeStrategy range. Dzmitry Lipski, interactive investor’s head of funds research, said: “Vanguard have been slow to embrace a sustainable investing range, so these launches fill an important gap in their offering and are very welcome.” However, these passive funds are more expensive than the LifeStrategy range, with an OCF of 0.48% versus 0.22%.

The final Vanguard showing in December’s top 10 table is Vanguard US Equity Index in seventh place.

Baillie Gifford American remained in ninth place in December. Its current top 10 holdings include US software business Cloudflare (NYSE:NET), private banking and wealth management specialist First Republic Bank (NYSE:FRC) and Canadian e-commerce platform Shopify (NYSE:SHOP). Baillie Gifford US equity strategy specialist Ben James said Shopify “is providing entrepreneurs with an e-commerce alternative to Amazon” in an update from the Edinburgh-based fund house last month.  

The fund that exited the top 10 in December was LF Blue Whale Growth.

Top 10 most-popular investment funds: December 2021

Rank   Fund IA sector Ranking change since previous month 1-year return to 4 Jan 2022 (%) 3-year return to 4 Jan 2022 (%)
1 Fundsmith Equity Global No change 21.1 84.1
2 Vanguard LifeStrategy 80% Equity Mixed investment 40%-85% shares No change 14 44
3 L&G Global Technology Index Technology & Telecommunications Up one 34 170
4 Baillie Gifford Positive Change Global Down one 9.1 154
5 Vanguard LifeStrategy 60% Equity  Mixed investment 40%-85% shares No change 9.1 35.1
6 Rathbone Global Opportunities Global Up two places 19.1 102
7 Vanguard US Equity Index North America Down one 27.1 82.1
8 Vanguard LifeStrategy 100% Equity Global Down one 18.1 53
9 Baillie Gifford American North America No change -2 175
10 Vanguard FTSE Global All Cap Index Global New entry 18.1 61

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

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