Which were the most popular funds with our clients in June 2017?

Jason Hollands, Managing Director at the Tilney Group, looks at which funds proved most popular with clients using the group’s Bestinvest Online Investment Service in June.

At a glance: The most popular funds selected by clients using the Bestinvest Online Investment Service in June 2017:

¹As a matter of policy Tilney does not star-rate its own in-house managed Multi-Asset Portfolio funds. However each of these invests in a diversified selection of circa 20 top-rated underlying funds selected by the Tilney research team.

Hollands comments: “The investment choices made by Bestinvest clients in June proved to be consistent with the pattern in recent months: a heavy preference for equities and choices dominated by seasoned active fund managers.

“Once again, Terry Smith’s Fundsmith Equity fund came out on top, a position it has held for a year. Terry Smith has an invest-and-hold strategy focused on a concentrated portfolio of 30 quality growth stocks from across developed markets.

“The Tilney Bestinvest Growth was the second most popular fund and is a ready-made portfolio for investors with a long investment time horizon. It invests into a portfolio of funds and ETFs selected by our research team which include the likes of JO Hambro UK Opportunities, Liontrust Special Situations, Majedie UK Equity, Vanguard S&P 500 ETF and Artemis European Opportunities. 56% of the portfolio is invested in equities, with the remainder in absolute return funds, bonds, commercial property and gold.

“The Tilney Bestinvest Aggressive Growth Portfolio takes a more adventurous investment approach than the Growth portfolio, with a larger exposure to shares in small companies and overseas companies. It is also designed for investors with a high tolerance for risk and a long investment time horizon.

“The eponymous CF Woodford Equity Income fund, managed by Neil Woodford has consistently appeared in the top 10 listed since launch. Woodford has adopted a more bullish stance to companies exposed to the UK domestic economy recently arguing that people are “too downbeat on the UK”, prompting a pre-election investment spree in housebuilders, construction and property companies. His optimism remains undaunted by June’s shock General Election which resulted in a hung parliament, arguing if anything it may be supportive if it results in looser fiscal policy.

“One fund which continues to be popular within the emerging market and Asia space and continues to draw support from clients is the Stewart Investors Asia Pacific Leaders, a longstanding top rated fund. The fund, managed by David Gait, focuses primarily on investing in large companies with sustainable cash flows and robust balance sheets. Its highest weighting remains India (31.0%) followed by Taiwan (17.6%) but it has negligible exposure to China where concerns persist about the growth of debt.

“The Threadneedle European Select fund, run by Dave Dudding and Mark Nicholas, is consistently in our top 10 list. According to data from the Investment Association, European equity funds have seen a surge of inflows as the European economic outlook improves and concerns about political populism have eased. This fund retains a bias to the consumer goods, healthcare and consumer services sectors. The fund aims to seek out companies with strong brands that are less sensitive to price-based competition and as such the fund invests heavily in firms such as the world’s largest brewer Anheuser-Busch InBev and beverage company Pernod Ricard. It also holds large positions in consumer goods companies L’Oreal and Unilever.”

“The Threadneedle UK Equity Income fund is another popular choice for core UK equity exposure. Manager Richard Colwell has a pragmatic approach, focused on total return rather than yield per se. The fund is currently very underweight financials and overweight industrials compared to its FTSE All-Share benchmark. Companies within its top ten holdings include healthcare multinationals GlaxoSmithKline and AstraZeneca, and consumer goods companies Unilever and Imperial Brands.

“The Lindsell Train Global Equity fund recently celebrated its fifth birthday. The fund, run by experienced management duo Michael Lindsell and Nick Train, has a strategy from a concentrated portfolio of equities deemed to be durable, cash-generative business franchises which are held for the long term. The biggest holdings in the fund are the well-known household names like Nintendo, Heineken and Guinness owner Diageo, which although they note are often deemed to be ‘boring’, over the long term ‘boring’ wins out.

“Managed by Anthony Cross and Julian Fosh, the Liontrust Special Situations fund has long held a highly coveted five-star rating from our research team and has managed to achieve both significant and consistent outperformance over the long term, but with less volatility than the UK market. The fund follows a well-articulated process, called the Economic Advantage approach, that looks for companies able to sustain a higher than average level of profitability for longer than expected. The companies the fund invests in have distinct characteristics, like ownership of intellectual property, strong distribution channels or significant recurring revenue streams whether they are large, medium sized or smaller companies.

“Having fallen out of our top ten last month, the HSBC American Index has reappeared in tenth spot. The fund is a tracker fund that follows the S&P 500 index, has been the most popular choice of Bestinvest clients investing in the U.S. The US stock market is notoriously hard for active fund managers to beat and this tracker has a very low ongoing charges figure of 0.08%.

Investors remain with Lloyds shares

“While Bestinvest clients predominately choose funds, they can also purchase shares and investment trusts through the service. Lloyds Banking Group, one of the most domestically focused financial stocks on the market, has remained as the most popular stock for the third month running. In May it was announced that the Government was to sell off its last remaining shares in the bank eight years after pumping £20bn into the company to prevent the bank’s collapse. Since then it has remained on many ‘preferred stock lists. Sirius Minerals finally joined the FTSE 250 in June after stating that it was its intention to move from AIM in March. It recently reached a market cap of over £1billion, with many analysts believing it will continue on its exponential growth trajectory to reach the FTSE 100.”

Important Information:

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a guide to future performance.

Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing.

Underlying investments in emerging markets are generally less well-regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could both increase or decrease. These investments therefore carry more risk.

Smaller companies shares can be more volatile and less liquid than larger company shares, so smaller companies funds can carry more risk. The property market can be illiquid; consequently, there can be times when investors will be unable to sell their holdings. Property valuations are subjective and a matter of judgement.

Tracker funds track the performance of a financial index and as such their value can go down as well as up, much like shares, and you can get back less than you originally invested. Some are more complex so you should ensure you read the documentation provided to ensure you fully understand the risks.