Mixed fortunes for Baillie Gifford funds, and a newcomer investing in a mega-trend.
There was a 50:50 split between passive and active strategies in September, while Baillie Gifford American fell further out of favour, according to our monthly ranking of the most-bought funds based on the number of buys.
Against a backdrop of Federal Reserve tapering, inflation concerns, Joe Biden’s stalled infrastructure plan and a tech sell-off, Baillie Gifford American dropped from fourth place to sixth. The active fund, which boasts the best three-year return of all the funds in our top 10 table (see below), has failed to beat its benchmark in recent months, although this dip in performance is a short-term view.
Investors remained committed to global funds. Terry Smith’s Fundsmith Equity is still the most-bought fund on the ii platform, while Baillie Gifford Positive Change holds on to second place in the run-up to the COP26 Glasgow climate change conference next month. The Positive Change fund appears on our ACE 40 list of ethical investments. Another fund with a global mandate, Rathbone Global Opportunities, moved up two places to eighth.
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Vanguard’s LifeStrategy funds either kept their places since last month or inched higher; 80% Equity (third place), 100% Equity (seventh), 60% Equity (fourth, up from fifth). One of our recent features concentrates on the popular LifeStrategy range and considers how the ready-made portfolios have trounced most active multi-asset funds over the past decade. ii contributor Danielle Levi wrote: “The LifeStrategy 20% Equity fund, which allocates 20% to shares and 80% to bonds, has outperformed all its actively managed peers over the 10 years to the end of August, according to Morningstar’s data. The fund returned 77.5%, which compares to 52.6% by the average fund in the Investment Association’s Mixed Investment 0-35% Shares sector.”
Over the same period, the 60% Equity strategy beat 84% of its peers with a 138.5% rise, while the 80% Equity fund outperformed 93% of active competitors with a 174.6% gain. The LifeStrategy 20%, 60% and 80% Equity options form part of our Quick-start funds range. The feature goes on to ask whether the range can repeat its success in the future.
The final Vanguard fund in September’s ranking was Vanguard US Equity Index, which slipped one place to ninth, while the final passive fund in the top 10 was the L&G Global Technology Index, which rose one place to fifth.
- Vanguard LifeStrategy range: can active multi-asset funds compete?
- Japan is September’s top market, but who will win in October?
September’s newcomer was the FSSA Japan Focus fund. Douglas Chadwick, who bought the fund last month for one of the Saltydog portfolios, recently observed how the Japanese market in September “has been going like one of their super-fast bullet trains”. Japan’s Nikkei was the top-performing major share index in the past month as it delivered a 7.5% rise for the four weeks to 28 September. The performance has been attributed to the departure of prime minister Yoshihide Suga, who has been criticised over both his response to the pandemic and the economy.
The FSSA Japan fund was launched in 2015 and has been run by Sophia Li since inception. It invests at least 80% in shares of large and medium-sized companies. The portfolio is currently comprised of 37 stocks, and top 10 holdings at the time of writing include staffing agency Recruit Holdings, Keyence, which develops sensors and measuring instruments for factory automation, and Lasertec, which is one of the largest semiconductor production equipment companies in Japan. Investment managers FSSA say that the latter should benefit from the increasing adoption of extreme ultraviolet (EUV) lithography in the semiconductor manufacturing process.
Japanese companies make more than 50% of all industrial robots and computer-controlled systems globally, according to FSSA, with Japan funds offering investors a way to play the automation mega-trend.
The fund that exited the top 10 in September was LF Blue Whale Growth.
Top 10 most-popular investment funds: September 2021
|Rank||Fund||IA sector||Ranking change since previous month||1-year return to 4 Oct (%)||3-year return to 4 Oct (%)|
|1||Fundsmith Equity||Global||No change||16.7||51.9|
|2||Baillie Gifford Positive Change||Global||No change||33.2||128.2|
|3||Vanguard LifeStrategy 80% Equity||Mixed investment 40%-85% shares||No change||17.2||27.2|
|4||Vanguard LifeStrategy 60% Equity||Mixed investment 40%-85% shares||Up one place||12.2||23.8|
|5||L&G Global Technology Index||Technology & Telecommunications||Up one place||26.5||96.9|
|6||Baillie Gifford American||North America||Down two places||23.1||135.9|
|7||Vanguard LifeStrategy 100% Equity||Global||No change||22.3||30.3|
|8||Rathbone Global Opportunities||Global||Up two places||16.7||54.9|
|9||Vanguard US Equity Index||North America||Down one place||25.7||50.2|
|10||FSSA Japan Focus||Japan||New entry||16.2||55.6|
Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of September.
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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.