Top 10 most-popular investment funds: March 2021

1st April 2021 15:12

Nina Kelly from interactive investor

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We reveal the placing of Terry Smith’s Fundsmith Equity, the new order at the top of the table, and two newcomers.

 Terry Smith’s Fundsmith Equity is back at the top of our most-bought funds’ list. Interactive investor recently interviewed Smith, who runs his £22.6 billion global equity fund from Mauritius. 

As part of a wide-ranging interview, Smith shared the things he looks for when evaluating companies. One quality he seeks is firms “who supply everyday necessities, the luxuries that we use without thinking about it in our business lives, in our personal lives as consumers, and so on and so forth.” Examples of such companies in Fundsmith Equity’s top 10 holdings include L'Oreal (EURONEXT:OR), Philip Morris (NYSE:PM) and Estee Lauder (NYSE:EL)

Fundsmith Equity’s return to the number one spot resulted in Baillie Gifford American being knocked off its perch. The fund fell to third place, according to the number of buys during the month by interactive investor customers. Baillie Gifford American’s performance over the past year has been exceptional, and as a recent article pointed out, it returned 130% over the 12 months of lockdown*. The fund’s holdings include ‘pandemic winners’ Shopify (NYSE:SHOP) and Netflix (NASDAQ:NFLX), as well as vaccine developer Moderna (NASDAQ:MRNA).

The fund that pipped Baillie Gifford American to second place was Vanguard LifeStrategy 80% Equity, which rose to the spot from seventh place. The multi-asset passive fund was joined in its ascent up the rankings by sister fund Vanguard LifeStrategy 60% Equity, which surged five places to fourth. Two new entrants in March were also from the Vanguard stable: Vanguard LifeStrategy 100% Equity (seventh place) and Vanguard US Equity Index (10th).

The latter fund, which is one of our Super 60 choices, has not been seen in the most-bought funds’ list for about a year. One factor behind its reappearance could be investors’ perception that the tech sell-off that began in mid-February was somewhat overdone. In addition, US president Joe Biden’s $3 trillion Covid recovery package is likely to be reassuring for investors seeking US equity exposure.

However, the popularity of Vanguard’s LifeStrategy funds last month can most likely be explained by retail investors making the most of their annual ISA subscriptions before the start of a new tax year on 6 April 2021. In addition, some Britons accrued  ‘accidental savings’ during the pandemic, while the freezing of income tax thresholds (which kicks in next April) in chancellor Rishi Sunak’s Budget on 3 March means using tax wrappers to shelter investments makes even more sense. Also, those investors following the debate about whether value investing is making a comeback, may be buying passive funds while they wait to see whether a style rotation firms up.

Edinburgh-headquartered Baillie Gifford, which recently announced that longstanding fund manager James Anderson will be retiring next year, is still dominant and holds a total five spots in March’s table.

Recent research conducted by interactive investor highlighted how lump sum investors favoured Baillie Gifford China (eighth) and Baillie Gifford Pacific (ninth) during lockdown, while Baillie Gifford Global Discovery (sixth) proved popular among both lump sum and regular investors.

* Period from 23 March 2020 to 15 March 2021.

Top 10 most popular funds: March 2021

Rank   Fund IA sector Ranking change since previous month 1-year return to 1 April (%) 3-year return to 1 April (%)
1 Fundsmith Equity Global Up 1 29.6 61.2
2 Vanguard LifeStrategy 80% Equity Mixed investment 40%-85% shares Up 5 28.8 30.2
3 Baillie Gifford American North America Down 2 105 187.8
4 Vanguard LifeStrategy 60% Equity Mixed investment 40%-85% shares Up 5 21.4 25.3
5 Baillie Gifford Positive Change Global Down 2 79.3 130.7
6 Baillie Gifford Global Discovery Global Down 1 74 106.7
7 Vanguard LifeStrategy 100% Equity Global New entry 36.3 35
8 Baillie Gifford China China Down 4 58.4 -
9 Baillie Gifford Pacific Asia Pacific Excluding Japan Down 3 86.5 83.4
10 Vanguard US Equity Index North America New entry 45.7 61.3

Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of March 2021.

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.

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