Interactive Investor

Top 10 most-popular investment funds: September 2022

3rd October 2022 11:32

by Sam Benstead from interactive investor

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Investors retreat to passive funds as stock and bond markets plunge in September.

A road leading an investor to either active or passive funds.

September was a tumultuous month for stock, bond and currency markets. American shares, as measured by the dollar value of the S&P 500, fell nearly 10%, and the FTSE 100 dropped about 6%.

Meanwhile, the pound fell 3.5% against the dollar, after being down as much as 7% at one point, and UK government bonds sold off with yields for the 10-year gilt now at 4%.

Amidst the negative sentiment, interactive investor customers turned to passive funds. Of the most-bought funds in September, nine out of 10 were index strategies compared with seven out of 10 in August.

The only active fund on the list – retaining its top spot – was Fundsmith Equity, managed by star manager Terry Smith.

The giant fund has been a relatively strong performer this year given its bias to expensive “growth” shares that have been under pressure due to rising interest rates. It has returned -16% versus a 12.5% drop for the average global fund.

The active funds that dropped off the most-bought list were Baillie Gifford American, Fidelity Global Technology and FTF ClearBridge Global Infrastructure Income.

Expensive shares, which Baillie Gifford American and Fidelity Global Technology own, have been under pressure this year and took another turn downwards in September. The technology-heavy Nasdaq Composite index fell 10% for the month.

ClearBridge Global Infrastructure Income owns listed stocks involved in key infrastructure areas, including utilities, airports and toll roads. 

Entering the most-bought list in September was Vanguard FTSE Developed World Ex UK Equity Index, HSBC American Index, and Fidelity Index World.

Index investors have performed relatively well this year compared with active fund investors. The MSCI All-Country World index has lost 10% this year (in sterling terms) compared with a 12.5% drop for the typical active global fund. In the US, the S&P 500 is down 8%, similar to the average return from North America funds.

Vanguard FTSE Global All Cap Index rose two places up the most bought list, moving from seventh to fifth place, and L&G Global Technology Index rose three places to seventh. Vanguard LifeStrategy 60% Equity fell one place to sixth.

The four most-bought funds stayed the same month over month, with Fundsmith Equity followed by three Vanguard funds: Vanguard LifeStrategy 80% , US Equity Index and LifeStrategy 100% Equity.

RankFundRanking change since previous monthOne-year return to 1 October (%)3-year return to 1 October (%)
1Fundsmith EquityNo change-11.120.7
2Vanguard LifeStrategy 80% EquityNo change-7.510.3
3Vanguard US Equity IndexNo change-1.335.9
4Vanguard LifeStrategy 100% Equity No change-4.517.8
5Vanguard FTSE Global All Cap IndexUp two-4.622.5
6Vanguard LifeStrategy 60% EquityDown one-10.33
7L&G Global Technology IndexUp three-13.856.7
8Vanguard FTSE Developed World Ex UK Equity IndexNew entry-0.527
9HSBC American IndexNew entry2.542.2
10Fidelity Index WorldNew entry-229.2

Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of September. Performance data from FE Analytics. 

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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