US election gets cold shoulder and Baillie Gifford dominance continues

We take a look at what interactive investor customers purchased on the platform in October.

Fundsmith Equity just pipped Baillie Gifford American to top of the list of besting funds on interactive investor in the final days of October, while there was also a renewed appetite for Japanese and Chinese selections across both investment trusts and funds. 

Meanwhile, with a second national lockdown in the UK only days away, it is notable that not a single UK focussed fund made the top 10 in October, and the only UK investment trust was industry stalwart City of London (LSE:CTY).

Baillie Gifford’s rise over the last several months amongst DIY investors has been eye catching as active funds return to popularity. In October 2020, six funds from the Scottish fund management group featured in the top 10, compared to zero in March 2020, when Vanguard was dominant and had six funds in the top 10 (now down to two).

East, not West?

While the West struggles with Covid-19, it is perhaps no coincidence that all three of the investment trust sectors’ China specialist trusts were in the top 10 trust selections in October. Fidelity China Special Situations (LSE:FCSS) was in second place, followed by JPMorgan China Growth & Income (LSE:JCGI) and Baillie Gifford China Growth Trust (LSE:BGCG) in fourth and fifth positions respectively. 

In another sign of investment trust investors turning to the East, a Japanese Smaller Companies trust, Baillie Gifford Shin Nippon (LSE:BGS), featured in sixth place.

The rise of the East was a theme that also played out in the top 10 funds selections, with Baillie Gifford China in fifth place, Baillie Gifford Japan Smaller Companies in sixth place and Legg Mason IF Japan Equity in 10th place.

Baillie Gifford Positive Change continues to be popular, in third position, having become a new entrant to the bestsellers list over the summer. It has also recently gained inclusion on interactive investor’s recently expanded ACE 40 list of rated ethical selections.

Funds race

The big race was between Baillie Gifford American, which was leading Fundsmith Equity and in first place until 28 October, only to be pipped to the number one spot by Terry Smith’s fund in time for its 10th anniversary on 1 November. Fundsmith Equity regained the number one spot in the closing days of October as the closely fought US presidential election edges nearer and amid news of a second lockdown for in England.

Teodor Dilov, Fund Analyst, interactive investor, says: “It is interesting to see that Fundsmith Equity just pipped Baillie Gifford American to top the list of most bought funds in October. Both funds have tussled for number one spot in recent months, but anticipation around the upcoming US Presidential election, may have been tempered by Coronavirus concerns as investors perhaps decided to go for global diversification. 

“Fundsmith Equity’s popularity is a testament of the faith our customers have on the fund’s simple investment philosophy of buying companies around the world that had the power to turn cash into consistent profits. Put simply, the fund has been a favourite among investors come rain or shine. 

“The plight of the ongoing coronavirus crisis on the Western world is likely to explain the increased appetite to Asian strategies, as China and a host of Asian countries appear to have fared better at controlling the virus. Whether this will continue remains to be seen.” 

Equities

Keith Bowman, Equity Analyst, interactive investor, says: “A major fundraising to shore up its Covid hit balance sheet has continued to occupy Rolls Royce shareholders. The aircraft engine maker is in the process of raising £2 billion from its shareholder base along with additional funds from bondholders and loans. 

“Airline and owner of British Airways IAG (LSE:IAG) is also battling hard against the pandemic. Its shares are down over 70% year-to-date. Like many of its counterparts, IAG has also recently raised cash in order to boost its finances. The delayed change of its CEO has now happened. Like rivals, it recently cut its expected winter season capacity following a retightening of pandemic restrictions across many European countries. 

“Airline and travel related stocks remain at the forefront of pandemic uncertainty and its impact on share price volatility.  

“Prospects for Covid-19 testing firm Novacyt (LSE:NCYT) have seen both interest from investors and the share price rocket of recent months. Novacyt has been busy using cash flows generated from Covid-19 testing kits to strengthen its position across the diagnostics market.

“Recent results from both BP and Shell following previous dividend cuts under Covid hit demand have seen shares for the oil majors back in the spotlight. Some recovery in oil demand following initial lockdowns helped lift performance for each. That said, both remain clouded by the outlook for the pandemic with the oil price more recently suffering under renewed European lockdowns.”

Top 10 most-bought funds, investment trusts and equities on interactive investor in October 2020