Interactive Investor

Top 10 most-popular investment funds: November 2023

Fundsmith Equity remains in second place, behind a money market fund yielding above 5%.

1st December 2023 10:40

Kyle Caldwell from interactive investor

For the second successive month Royal London Short Term Money Market tops the table as the most-bought investment fund among interactive investor customers.

The low-risk fund has remained in our monthly top 10 rankings since it entered the top 10 in April. Money market funds see their cash-like investments rise as interest rates climb, which has attracted many investors. The fund, which boasts assets of more than £6 billion, has a distribution yield of 5.3%.

Money market funds own a diversified basket of very low-risk bonds that are due to mature soon, normally in under a year. They can also put money in bank deposit accounts. As a result, investors can earn an income on their cash with minimal risk.

Fund industry trade body the Investment Association (IA) categorises money market funds into two buckets: short-term and standard-term funds. 

Remaining in second place, having previously topped the fund charts every month since June 2019, is Fundsmith Equity.

It remains hugely popular among interactive investor customers. Star fund manager Terry Smith focuses on “high-quality” companies, meaning firms with established businesses, reliable profits and steady growth, which should also be able to withstand an economic downturn.

Despite some investors dialling down on risk, which is another driver behind Royal London Short Term Money Market’s popularity, other investors are happy to take a more adventurous approach.

This is reflected by L&G Global Technology Index third-place position. Over the past year, this passive index fund has been benefiting from advancements in, and the future potential of, artificial intelligence (AI). The so-called Magnificent Seven technology companies have seen their share prices sizzle on the back of investors buying in to gain exposure to the trend. In our most recent On The Money podcast, we discussed the theme of AI, including how to profit from it, with fund manager Stephen Yiu, of Blue Whale Growth fund.

With index funds or exchange-traded funds (ETFs), it is worth bearing in mind that individual stock positions, and therefore risk levels, can be higher than in actively managed funds. In the case of L&G Global Technology Index, Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) have individual weightings of 18.4% and 18.2%. This is all well and good when share prices are going up, but if and when those two companies have a period of underperformance, it will have a very sizeable impact on the overall performance of the fund.

In contrast, there are rules that open-ended funds need to adhere to in order to have sufficient diversification, including a maximum weighting of 10% in a single stock. Investment trusts do not have the same rules.

Another adventurous strategy in favour is Jupiter India. Funds have poured into Indian equities and bonds at a very rapid rate this year, often at the expense of China.  Another driver is that India's stock market has been enjoying a purple patch. The S&P BSE 100 Index has been the best-performing market since Covid, up 149% from 3 April 2020 to 27 November 2023. In second place is the Nasdaq 100 index, which has gained 112%.

India has plenty of attractions as an investment destination. It has a young population, with around a quarter of the world’s under-25s. This young population is part of an expanding middle class, which is expected to fuel economic growth in the decades to come. In addition, Prime Minister Narendra Modi’s reforms, such as the unification of taxes and demonetisation, are expected to benefit the economy.

For more on India, including whether its valuations have become too pricey, examine our long-read feature.

The rest of the table is comprised of global index funds, and one US strategy: Vanguard US Equity Index.

The global index funds proving popular are HSBC FTSE All-World Index, Vanguard LifeStrategy 100% Equity, Vanguard FTSE Developed World ex-UK Equity Index, and Vanguard FTSE Global All Cap Index.

The other fund in the table, in fourth place, is Vanguard LifeStrategy 80% Equity. This index fund, as the name suggests, mainly invests in equities, with a 20% allocation to bonds.  

There were no new entrants in November.

Top 10 most-popular funds in November 2023

RankFund Sector Ranking change since previous month 1-year return to 30 Nov (%) 3-year return to 29 Nov (%)
1Royal London Short Term Money Market Short Term Money Market                                         No change 4.65.7
2Fundsmith Equity Global                                         No change 10.416.5
3L&G Global Technology Index Technology and Technology Innovations                                               Up five4149.7
4Vanguard LifeStrategy 80% Equity Mixed Investment 40%-85% Shares                                        Down one 513.3
5Jupiter India India/India Subcontinent                                              Up one 21.190.7
6HSBC FTSE All World IndexGlobal                                        Down one 8.223.6
7Vanguard LifeStrategy 100% Equity Global                                      Down three 6.522.9
8Vanguard US Equity Index North America                                              Up one 930.4
9Vanguard FTSE Developed World ex-UK Equity Index Global                                               Up one9.226.9
10Vanguard FTSE Global All Cap Index Global                                      Down three 721.1

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

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