October's 10 most-bought funds
Neil Woodford's flagship fund CF Woodford UK Equity Income remains the most-bought fund in October for the third consecutive month according to data from our sister website Interactive Investor.
The star manager attracted more than double the amount of trades of the second most-bought fund, First State Asia Pacific Leaders, which similarly retained its place for the third month in a row.
Commenting on the results, Rebecca O'Keeffe, head of investment at Interactive Investor, says: "With income remaining a major priority for a large number of investors, the highly respected Neil Woodford remains an active choice for many.
"This is particularly the case in an environment which has seen a number of large income stocks cut their dividend yield in recent weeks. Although his fund only launched in June, the much-lauded manager has already proven his value, and is currently outperforming his peer group," she says.
In the three months to 31 October CF Woodford UK Equity Income is the top-performing fund in the UK equity income sector, gaining 4.7%; however in the month to 31 October the fund lost 0.4%, placing it in the third quartile of the sector over the period.
In contrast, First State Asia Pacific Leaders enjoyed a strong month, returning 3.7% between the 30 September and 31 October helping to drive 12-month returns up to 12% and three-year returns up to 36.7%.
The third most-bought fund was Axa Framlington Biotech. Launched in 2001, the fund invests exclusively in the shares of global companies involved in the biotechnology, genomics and medical research industries.
In the month to 31 October Axa Framlington Biotech returned a heady 9.5%, while over one year to 31 October it has returned 44% and nearly 200% in the three years to 31 October - making it the best-performing fund in the top 10 by a wide margin.
First State and Axa's funds were among only four funds in the top 10 to invest outside of the UK, with investors continuing to prefer domestic equities. Invesco Perpetual High Income, one of Woodford's former funds, was the fourth most-bought fund again for the third consecutive month.
Despite suffering heavy outflows as investors followed Woodford into his new fund, Invesco Perpetual High Income has returned 3.3% in the six months to 31 October and 9% in the 12 months to 31 October, placing it in the top quartile of the UK all companies sector over both periods.
Tracker fund popularity
The HSBC FTSE 250 Index tracker fund was the fifth most-bought fund in October, retaining its place from September.
The fund is a regular constituent of the top 10 most bought as is the HSBC FTSE All Share Index tracker, which re-entered the table for the first time since March at number 10.
Fundsmith Equity, managed by Terry Smith, was the sixth most-bought fund overall. At 60% of the portfolio the global fund is largely invested in US equities, which has helped to drive its performance in recent months.
Over the 12 months to 31 October the fund has returned 15%, making it the fourth best performer in the 258-strong global sector.
Joining the HSBC trackers were two Vanguard tracker funds: Vanguard LifeStrategy 80% Equities and Vanguard FTSE UK Equity Index, which were the seventh and eighth most-bought funds respectively.
This brought the total number of tracker funds in the top 10 up to four - the highest number to ever feature in most bought.
This perhaps reflects the rising popularity of tracker funds, which passively track equity or bond indices for fees typically much lower than those charged by actively managed funds.
Trackers attracted record breaking inflows in August when the Investment Management Association reported sales of £513 million.
O'Keeffe comments: "Tracker funds have been in sharp focus over the past few months, with a price war having broken out between a number of large fund groups.
"This is having a positive impact on overall passive investment levels, with tracker funds now representing over 10% of UK retail assets under management."
Unicorn UK Income, was the ninth most-bought fund for the second month in a row as it continues to regain ground following recent outflows prompted by the untimely death of the fund's former manager John McClure in June.
This article was written for our sister website Money Observer
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%.
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).
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.