October's 10 most-bought funds
The latest data from our sister website Interactive Investor shows the most-bought funds were income funds in October.
Last month the announcement that Invesco Perpetual equity income manager Neil Woodford is to leave the company in April next year has seen advisers downgrade his funds.
Invesco Perpetual High Income takes third spot
Despite speculation that investors would sell Woodford's £1.3 billion Invesco Perpetual High Income fund, it was the third most bought in October on Interactive Investor. The fund invests primarily in companies listed in the UK, with the balance invested internationally. Over one year, the fund has returned 24% compared with 26% average for the UK Equity Income sector as at 31 October.
Rebecca O'Keeffe, head of investment at Interactive Investor, said: "Some existing Neil Woodford investors may be concerned that the fund has been removed from adviser buy lists, but updating a buy list is not the same as a recommendation to sell.
"When you have a high-profile manager leave, the fund gets put under review and this typically means it is not supported for new business and does not appear on any 'buy lists' until that review has been completed. This is definitely not the same as suggesting that existing investors should sell."
Top holdings in the Invesco Perpetual High Income fund include biopharmaceutical company AstraZeneca, GlaxoSmithKline, BAE Systems and Swiss healthcare company Roche.
Carrying on the UK income theme, fifth most-popular was the £420 million Unicorn UK Income managed by John McClure. The manager aims to deliver a gross yield at least 10% greater than the yield produced by the FTSE All Share Index. Over one year, the fund has returned 42% and currently ranks third in the UK Equity Income sector.
Top billing: Cazenove UK Smaller Companies
The most-bought fund last month is yet again the Cazenove UK Smaller Companies fund managed by Paul Marriage. At least 80% of its assets are invested in UK-listed companies that form the bottom 10% by market capitalisation. Over one year, the fund has returned 46.1% compared with an average 33.9% for the UK Smaller Companies sector. Top holdings in the Cazenove UK Smaller Companies fund include Xaar, Marston's, Perform Group, Menzies and Premier Foods.
The second-most-bought fund was Aberdeen Emerging Markets fund, managed by a team led by Devan Kaloo. Despite the fund's enduring popularity, relative performance has slipped, and it ranks only in the third and fourth quartile for the Global Emerging Markets sector for periods up to one year.
More focused emerging markets exposure was also popular among Interactive Investor users: in fourth place was the £6.7 billion First State Asia Pacific Leaders fund managed by Alistair Thompson. The fund invests in shares of large and mid-sized companies in the region, including Australia and New Zealand but excluding Japan.
Combining the above with an income theme is also proving popular: in sixth place was the £4.1 billion Newton Asian Income fund managed by Jason Pidcock and Caroline Keen. The fund aims to achieve income and capital growth over the long term and over one year, the fund has returned 11% compared with 13% in the Asia Pacific excluding Japan.
Although Japan's stockmarket has become somewhat becalmed over the past few months, investors continue to latch on to the top-performing fund in the region over several periods and in seventh place is the £236.4 million Legg Mason Japan Equity fund. With a 67% gain over the year, it has doubled the average return for the sector over the year and its 190% return over three years is more than six times the sector average.
Turning to a more specialised mandate, the eighth most-bought OEIC was the £215 million AXA Framlington Biotech fund. Manager Linden Thomson aims to provide long-term capital appreciation by investing principally in equity securities of companies in the biotechnology, genomics and medical research industries worldwide. And while comparisons in the Specialist sector are not particularly useful, it is interesting to note that the fund ranks first over one, three and five years.
Next is the £1 billion HSBC FTSE All Share Index which is a tracker fund that invests in companies that represent the UK stockmarket. Over one year, the fund has returned 21%. It's extremely low annual management charge of 0.25% compares well with exchange traded funds with similar aims.
Finally, the £787 million Standard Life Investment UK Equity Unconstrained fund is the tenth most bought in October on Interactive Investor. The fund is managed by Ed Legget, who has a 'go anywhere' mandate without reference to index weight or size, and which is reflected in a concentrated portfolio of stocks. It's 55% return places the fund in third place over a year, but it is second to none of the 257 funds in the UK All Companies sector over five years, having generated an impressive 390% return.
This article was written for our sister website Interactive Investor
The general term for the rate of income from an investment expressed as an annual percentage and based on its current market value. For example, if a corporate bond or gilt originally sold at £100 par value with a coupon of 10% is bought for £100 then the coupon and the yield are the same at 10%, or £10. But if an investor buys the bond for £125, its coupon is still 10% (or £10) and the investor receives £10 but as the investor bought the bond for £125 (not £100) the yield on the investment is 8%.
Generic, loosely-defined term for markets in a newly industrialised or Third World country that is in the process of moving from a closed economy to an open market economy while building accountability within the system. The World Bank recognises 28 countries as emerging markets, including Argentina, Brazil, China, Czech Republic, Egypt, India, Israel, Morocco, Russia and Venezuela. Because these countries carry additional political, economic and currency risks, investors in emerging markets should accept volatile returns. There is potential to make large profit at the risk of large losses.
Annual management charge
If you put money in an investment or pension fund, you’ll not only pay a fee when you initially invest (see Allocation Rate) but also a fee every year based on a percentage of the money the fund manages on your behalf. Known as the AMC, the actual percentage varies according to the particular fund, but the industry average for active managed funds is 1.5%.
A way of valuing a company by the total value of its issued shares and calculated by multiplying the number of shares in issues by the market price. This means the market capitalisation fluctuates continually as the value of the shares change in the market. For example, HSBC has 17.82bn shares in issue at a price of 646.2p making a market capitalisation of £115.15bn.