December's ten most-bought funds
The latest data from our sister website Interactive Investor shows the most-bought funds for the month of December were UK smaller company focused.
Paul Marriage's Cazenove UK Smaller Companies fund was the most-bought offering for the fourth consecutive month.
Last year Schroders announced it would close the small-cap fund managed by Marriage to new money on 22 January 2014, subject to regulatory approval.
It seems, as the UK economy begins to recover, many investors are turning to UK small-cap funds for gains.
Chartered financial planner at Chase de Vere Patrick Connolly says: "Investments which have performed strongly usually become more popular with investors. In 2013 the UK Smaller Companies sector was the top performer, with the average fund returning more than 37% in the year."
Connolly explains sentiment toward the UK smaller companies sector continues to be positive, with smaller companies likely to benefit if the UK economic recovery continues as many expect.
However, he warns: "Strong recent performance should be seen as a warning sign rather than a reason to invest; those jumping in now are doing so after big gains have already been made."
The second most-bought fund on Interactive Investor was the £26.2 million CF Miton UK Smaller Companies fund managed by Gervais Williams and Martin Turner. The fund primarily invests in UK-quoted smaller companies.
Top holdings in the Miton fund include Quindell, MichelMersh Brick Holdings, SQS Software Quality Systems, Brady, Burford Capital, Shore Capital Group, Amino Technologies, Everyman Media Group, CML Microsystems and International Greetings.
Over one year, CF Miton UK Smaller Companies has returned 50.3% compared with an average of 32.6% in the UK smaller companies sector.
Gold back on track?
The next most-bought fund is the £60.7 million Investec Global Gold fund managed by Bradley George and Scott Winship.
Top holdings in the fund include Randgold Resources, GoldCorp, Barrick Gold, Franco-Nevada, DB Physical Gold, New Gold Issuer, Yamana Gold and Regis Resources.
The first half of 2013 was tough for gold, the price went from $1,675 (£1,020) per ounce to less than $1,200, but during the second half of 2013 the price of gold showed some recovery regaining the $1,400 level.
Julian Jessop, chief global economist at Capital Economics, highlights there are various factors that will undermine the price of gold in 2014. He says: "We see more positives than negatives for gold.
"Producers are reportedly starting to sell their output in the futures market to lock in prices that are still historically high. In the meantime, the swing from central bank selling to buying could be complete."
The fourth most-bought fund on Interactive Investor is Terry Smith's £1.5 billion Fundsmith Equity fund. Last month Smith's fund was the third most-bought fund on Interactive Investor. Over one year, the fund has returned 21.1% compared with an average of 17.4% in the Global sector as at 3 January.
Next we have another small-cap offering, the Unicorn UK Smaller Companies fund managed by John McClure, who also co-manages Unicorn Free Spirit with Fraser MacKersie; and Unicorn Smaller Companies and Outstanding British Companies funds with Chris Hutchinson.
Top holdings in the Unicorn UK Smaller Companies fund include Berendsen, Electrocomponents, ROC Group, Interserve, Menzies, Cineworld, Premier Farnell, Brewin Dolphin, Marston and Mucklow.
Over one year, the fund has returned 37.9% compared with an average of 22.7% in the UK equity income sector as at 3 January.
Sixth is the Invesco Perpetual Monthly Income Plus fund, managed by Paul Causer, Paul Read and Ciaran Mallon. Over one year, the fund has returned 9.1% compared with an average of 3.03% in the sterling strategic bond sector as at 3 January.
Richard Buxton's Old Mutual UK Alpha fund fared well as the seventh most-bought fund for the month of December. Buxton, head of equities at Old Mutual Global Investors, has expanded his fund range with a new launch.
Buxton invests in a portfolio of predominantly UK equities, either directly in transferable securities or through collective investment schemes.
Top holdings in Old Mutual UK Alpha fund include HSBC, Lloyds Banking Group, International Consolidated Airlines, Royal Dutch Shell), Rio Tinto, GlaxoSmithKline, Resolution, Genel Energy, Glencore Xstrata and Barclays.
Next is the £673 million HSBC FTSE 100 Index fund, which aims to provide long-term capital growth by matching the return of the FTSE 100 Index. The ninth most-bought fund is the £991 million Schroders US Mid Cap fund, managed by Jenny Jones.
Last but not least is the L&G US Index unit trust which tracks the performance of the FTSE World USA Index.
This feature was written for our sister website Interactive Investor
A collective investment vehicle (known in the US as a “mutual” or “pooled” fund) and similar to an Oeic and investment trust in that it manages financial securities on behalf of small investors who, by investing, pool their resources giving combined benefits of diversification and economies of scale. Investors buy “units” in the fund that have a proportional exposure to all the assets in the fund, and are bought and sold from the fund manager. The price of units is determined by the value of the assets in the fund and will rise or fall in line with the value of those assets. Like Oeics (but unlike investment trusts) unit trusts and are “open ended” funds, meaning that the size of each fund can vary according to supply and demand of the units form investors. Unit trusts have two prices; the higher “offer” price you pay to invest and the “bid” price, which is the lower price you receive when you sell. The difference between the two prices is commonly known as the bid/offer spread.
A type of derivative often lumped together with options, but slightly different. The original derivative was a future used by farmers to set the price of their produce in advance before they sowed the seeds so that after the harvest, crops would be sold at the pre-agreed price no matter what the movements of the market. So a future is a contract to buy or sell a fixed quantity of a particular commodity, currency or security (share, bond) for delivery at a fixed date in the future for a fixed price. At the end of a futures contract, the holder is obliged to pay or receive the difference between the price set in the contract and the market price on the expiry date, which can generate massive profits or vast losses.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
An interchangeable term for shares (UK) or stocks (US). Holders of equity shares in a company are entitled to the earnings and assets of a company after all the prior charges and demands on the company’s capital (chiefly its debts and liabilities) have been settled. To have equity in any asset is to own a piece of it, so holders of shares in a company effectively own a piece proportionate to the number of shares they hold. (See also Shares).