May's 10 most-bought funds
Income remained top of fund buyers' lists throughout May while the UK held fast as investors' favoured region, according to data from Moneywise's sister website Interactive Investor.
Of the online stockbroker's ten most-bought funds in May, five were income focused. The most popular was a new entrant into the top ten for 2014, Threadneedle UK Equity Income, which was also the most-bought fund overall.
Managed by Leigh Harrison and Richard Colwell, Threadneedle UK Equity Income has been a strong performer since its inception in 2009, ranking in the top quartile of funds in the UK equity income sector over one, three and five years with returns of 16.7%, 50% and 116.4% respectively.
April's bestselling fund, John McClure's Unicorn UK Income, fell to fourth place - its lowest rank since January as investors seek out alternatives to the hugely popular fund, whose assets under management have more than tripled to £676 million over the past 12 months leading to speculation it may soft-close imminently.
The remaining bestselling income funds in May were Ecclesiastical Higher Income, a multi asset fund managed by Robin Hepworth; Neil Woodford's old fund Invesco Perpetual High Income, now managed by Mark Barnett; and Fidelity Moneybuilder Income, the only fixed income fund in the top ten, ranking in fifth, sixth and seventh place respectively.
As in previous months the UK dominated the list with six out of the 10 bestselling funds investing in the region. Alongside UK equity income, smaller companies remained popular despite the pull-backs seen in small-cap stocks over the past few months.
Marlborough UK Micro Cap, managed by small-cap specialist Giles Hargreave, was the third most-bought fund for the second month in a row, reflecting its consistent outperformance; over five years the fund has returned a top quartile 215%, compared to an average of 151% from the IMA UK smaller companies sector.
CF Miton UK Smaller Companies, managed by fellow UK smaller company specialist Gervais Williams, was the 10th most-bought fund. Although only launched in December 2012, the fund is another candidate for soft closure as its assets have swelled from £7 million to £183 million in just 12 months.
Commenting on investors' continued preference for the UK, Rebecca O'Keefe, head of investments at Interactive Investor, says: "The UK continues to dominate the most-bought funds despite the UK equity market remaining range bound.
"With markets at relatively high levels, there is some trepidation about where equities go from here, but equally, investors seem reluctant to be short of a market whose long-term trajectory has been firmly positive and where continued low interest rates mean there is no incentive to hold cash."
Among the non-UK funds, First State Asia Pacific Leaders was the most popular. The fund made a surprise re-entry into the top 10 bestselling funds for the first time since January, ranking as the second most-bought fund overall as emerging markets begin to recover from the sharp sell-offs seen in recent years.
Managed by Angus Tulloch and Richard Jones, the fund is one of the biggest in the entire open-ended universe with assets under management of nearly £6 billion. It is also one of the best-performing funds in the Asia Pacific excluding Japan sector, returning 352% over 10 years compared to an average of 224% from the sector.
Axa Framlington Biotech was the month's biggest mover, falling seven places from second bestselling fund in April to ninth bestselling fund in May as the biotech sector continues to reel from the sharp sell offs seen in April; over three months the Axa Framlington fund has lost more than 10%.
The only passive fund in the top ten, HSBC FTSE 250 Index, climbed further up the table, rising from 10th place in April to eighth place in May as investors remain unfazed by the heavy profit taking in the mid-cap sector that has seen the FTSE 250 index shed 3.3% over the past three months.
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).
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.