Who’s in and who’s out? The funds, trusts and shares in favour

Strong demand for global funds in August as Baillie Gifford dominates our top 10 list of fund purchases.

• Lindsell Train Global Equity misses out on a top 10 spot for the second month in a row.

Customers of interactive investor continued to favour overseas solutions in August, in the same month that the UK officially entered recession for the first time in 11 years.  

Baillie Gifford maintained its dominance on the list of top 10 fund purchases for a second month in a row, possibly at the expense of one or two other industry stalwarts. Lindsell Train, for example, missed out on a top 10 spot for the second month in a row, whilst Vanguard’s March dizzy high (six funds in the top 10) slimmed down to two in August.

Funds investing overseas accounted for all 10 bestselling funds last month, with nine of these following a global remit, and the other being a US fund. Fundsmith Equity retained the number one spot, ahead of Baillie Gifford American in second position and ethical fund Baillie Gifford Positive Change in third.

In all, funds by the Scotland-based asset manager Baillie Gifford accounted for five out of the top 10 fund purchases, with Baillie Gifford Global Discovery, Baillie Gifford Long Term Global Growth and Baillie Gifford Managed in fifth, sixth and eighth positions, respectively.

Rathbone Global Opportunities and L&G Global Technology Index Trust are the two new faces on the list from last month, completing the top 10 in ninth and tenth positions, respectively, replacing Baillie Gifford China and Polar Capital Global Technology.

Investment trusts

Investors also flocked to investment trusts with global mandates, accounting for 9 out of the top 10 bestsellers in August. UK focussed City of London (LSE:CTY), in eight position, is the only exception.

Scottish Mortgage (LSE:SMT), also managed by Baillie Gifford, once again secured the number one spot. It boasts a record as the most-purchased investment trust on the interactive investor platform every month bar one since February 2014.

Interactive investor is unconcerned by Morningstar’s recent downgrade of the trust from gold to silver as part of its enhanced ratings framework. However, interactive investor wonders what the implications may be for other over active strategies, given that their rational seems to have been in large part on cost grounds. This comes at a time when active strategies have made a comeback amongst retail investors over the last couple of months, and it will be interesting to see how this plays out.

Teodor Dilov, Fund Analyst, interactive investor, says: “We rate Scottish Mortgage trust as an adventurous option.  Its incredible track record has been built on exceptional stock selection and preference for innovative and disruptive businesses – and many of these have been in the technology sector. That comes at the price of increased volatility and taking profits now could be reasonable for those who have had larger exposure to the trust, but for those who hold it within reasonable limits it would hardly make any difference as the trust still remains a high-quality diversifier.

“It is also worth bearing in mind that the world has changed, and many companies traditionally perceived as ‘tech stocks’ are today so much more than that.”

There are three new entrants to the list from last month: Murray International (LSE:MYI) in seventh position, Personal Assets Trust (LSE:PNL) in ninth and Monks (LSE:MNKS) in tenth replacing Baillie Gifford US Growth (LSE:USA), Biotech Growth (LSE:BIOG) and Pacific Horizon investment trust. 

BlackRock World Mining Trust (LSE:BRWM), Polar Capital Technology (LSE:PCT), Allianz Technology Trust (LSE:ATT), Worldwide Healthcare (LSE:WWH) and Edinburgh Worldwide (LSE:EWI) all retain a place on the list.

Teodor Dilov, Fund Analyst, interactive investor says: “Investors on our platform have favoured collective investments that allow them to have their fingers dipped in different investment pies across the globe, rather than upping the risk stakes and banking on one region to deliver good investment returns amid the coronavirus recession. 

“Actively managed solutions remain popular among our customers, with Baillie Gifford seemingly viewed as having the Midas touch as strategies managed by the Scotland-based asset manager accounts for half of the bestsellers list in August. Conversely, while passive solutions have fallen off the top 10 purchases list, Vanguard’s LifeStrategy funds continue to make the cut, underlining their popularity whatever the market condition.

“It is also interesting to see Baillie Gifford Positive Change retaining a place on the list for the fourth month in a row, undoubtedly buoyed by its strong recent performance during a period of extreme stress. The fund is relatively young, having only launched in 2017 but its strong performance since inception helps to dispel the myth that returns must be sacrificed to invest ethically.”

Equities

Commenting on the bestselling equities, Keith Bowman, Equity Analyst, interactive investor, says: “Covid-19 and the prospects for companies under the pandemic continue to occupy investor thoughts. Airlines remain front and centre in the crisis. News in early August regarding a €2.75 billion (£2.48 billion) fund raising for IAG in order to strengthen its finances and hopefully see out the pandemic helped its shares to climb by over 30% in the month.

“AIM-listed Avacta Group gained a further 10% in the month. The developer of Affimer-based biotherapeutics previously announced a partnership with Cytiva — formerly GE Healthcare Life Sciences — to deliver a rapid test for Covid-19.

“Despite broadly tough half-year results announced in late July, Lloyds Bank remains a favourite with ii investors. An increase in the capital cushion and an ongoing push towards digital banking for its customers continued to provide investor positives. 

“BP’s recently announced halving of the dividend and new low carbon energy push is still being digested by shareholders. BP shares drifted 4% lower in August.”

Commenting on Supply@ME (LSE:SYME), Myron Jobson, Personal Finance Campaigner, interactive investor, says: “Supply@Me has seemingly emerged from the niches of the investment world and soared to the top of the equity bestsellers list on interactive investor in August. The early stage fintech penny stock, which is listed on the London Stock Market, allows businesses to unlock capital from their inventory to help improve their working capital position – something that many investors feel will be in high demand amid the pandemic. 

“Shares in the stock rose by an incredible 1,100% last month – yet the price per share remains below 1p. There is clearly a sentiment that the stock’s growth story will continue, but investors must do their own research and consider their own risk profile and investment time horizon instead being a ‘sheep investor’ and following the crowd, no questions ask.”

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