September's 10 most-bought funds
CF Woodford Equity Income continues to be the most-popular fund among private investors, according to data from our sister website Interactive Investor.
Star fund manager Neil Woodford's recently launched fund was the most-bought fund on Interactive Investor for the third consecutive month, as sector topping returns of 0.2% over one month and 3.9% over three months entice investors.
The fund shot to the top of the most-bought charts immediately after its launch in June and now has £3.1 billion of assets under management compared to £1.6 billion at inception.
A famously defensive investor, Woodford invests mostly in large-cap UK stocks in the healthcare and tobacco sectors, with AstraZeneca, GlaxoSmithKline, Imperial Tobacco and British American Tobacco all among his largest holdings.
As in previous months, investing for income remained a priority for Interactive Investor users in September, with one of Woodford's former funds, Money Observer Rated Fund Invesco Perpetual High Income, ranking as the fourth most-bought fund for the second consecutive month.
Having taken the reins in March this year, Woodford's former co-manager Mark Barnett has outperformed his sector and benchmark despite a bout of volatility following the former manager's departure.
Over one month the fund has lost 0.4% compared to a loss of 2.5% from its sector, UK all companies, while over three and six months it has returned 1.2% and 4% compared to losses of 0.8% and 1.1% from the sector.
All but one of Barnett's top 10 holdings match Woodford's, although with slightly different exposures, suggesting Woodford's celebrity status has attracted new investors rather than a difference in approach.
Another income-based fund retaining its place in the top 10 was fellow Money Observer Rated Fund Unicorn UK Income, which was the ninth most-bought fund in September, down from seventh place in August.
The fund has underperformed over the past 12 months, returning just 2.7% compared to an average of 7.6% from the UK equity income sector, however its long-term track record remains strong and boasts first-quartile performance over three, five and 10 years.
The fund was affected by heavy outflows following the sudden death of manager John McClure in June this year when co-manager Fraser Mackersie took over the portfolio with assistance from Unicorn UK Smaller Companies fund manager Simon Moon.
Fundsmith Equity, a new entrant to the 10 most-bought funds and also a Money Observer Rated Fund, was the sixth most-bought fund last month.
Manager Terry Smith has led the fund to strong returns over one and three years, delivering 14.7% and 63.7% respectively. This compares to an average return of 7.7% over one year and 44.2% over three years from the global sector.
The fund favours US equities, with over 60% of its portfolio invested in the region. Smith's largest sector weighting is consumer products and Pepsi Co., Unilever and Dr Pepper Snapple Group are among its top holdings.
In July, the UK's Investment Management Association noted that demand for tracker funds was at an all-time high and the latest data from Interactive Investor supports this trend, with two tracker funds making the 10 most-bought funds list for the first time last month.
Interest in the HSBC FTSE 250 Index fund rose, as it nabbed the fifth most-bought spot up from eighth in August. The fund has outperformed its sector, UK all companies, over one, three and five years, however has failed to match the returns of the FTSE 250 index over the same time periods.
Joining it was Vanguard's LifeStrategy 80% Equity fund, which has returned 9% over the past year compared to 5.6% from its sector, mixed investment 40-85% shares.
Investing 80% of its portfolio in equities and 20% in fixed income, the fund largely invests in other Vanguard tracker funds and boasts an annual ongoing charges figure of just 0.24%.
Money Observer Rated Fund Liontrust Special Situations dropped out of the top 10 after being named the third most-popular fund on Interactive Investor in August - the first time the fund had made the top 10 for more than a year.
In its place was Money Observer Rated Fund Axa Framlington Biotech, which was September's third most-bought fund. The fund is a persistent outperformer, returning 31.1%, 182% and 186.7% over one, three and five years respectively.
Money Observer Rated Fund First State Asia Pacific Leaders retained its second most-bought position in September, reflecting a stellar period of recent performance that has seen the fund nearly double the returns of the Asia Pacific sector in the year to 30 September.
Fellow Money Observer Rated Fund Marlborough UK Micro Cap Growth inched higher in September, taking the eighth most-bought spot from ninth during the previous month, while Newton Asian Income - another Money Observer Rated Fund - fell to 10th most-bought fund in September after re-entering the top 10 in August after a two-month absence.
Also known as index funds, tracker funds replicate the performance of a stockmarket index (such as the FTSE All Share Index) so they go up when the index goes up and down when it goes down. They can never return more than the index they track, but nor will they lose more than the index. Also, with no fund manager or expansive research and analysis to pay, tracker funds benefit from having lower charges than actively managed funds, with no initial charge and an annual charge of 0.5%.
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).
A standard by which something is measured, usually the performance of investment funds against a specified index, such as the FTSE All-Share. Active fund managers look to outperform their benchmark index. Cautious fund managers aim to hold roughly the same proportion of each constituent as the benchmark, while a manager who deviates away from investing in the benchmark index’s constituents has a better chance of outperforming (or underperforming) the index.
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.