January's 10 most-bought funds
Star manager Neil Woodford's flagship fund, CF Woodford Equity Income, was the bestselling fund on our sister website Interactive Investor during January as the investment veteran continues to outperform both his sector and benchmark.
Launched in June 2014, CF Woodford Equity Income has returned 14% in the six months to 10 February 2015 compared to 8% from the Investment Association's (IA's) UK equity income sector and just 6% from the FTSE All Share index.
The fund's total assets under management have swelled from £1.6 billion at launch to £4.7 billion today, making it the second largest UK equity income fund behind Artemis Income, which has assets of over £7 billion and was launched in 2000.
Axa Framlington Biotech was the second most-bought fund for the second consecutive month as it continues on a path of outstanding returns. Boosted by a strong pick-up in biotechnology over the past three years, the fund has returned 45% in the 12 months to 10 February and over 175% in three years to the same date.
Both of Woodford's former funds, Invesco Perpetual High Income and Invesco Perpetual Income, also made it into the top 10 at sixth and ninth most-bought fund respectively.
Now managed by the manager's former deputy Mark Barnett, both funds have continued to perform well, despite struggling with large outflows following Woodford's departure last year. In the 12 months to 10 February High Income has returned 15.1% while Income has returned 14.4%.
The number of Asia funds in the top 10 rose from one in December to three last month - the highest number of Asia funds recorded in the table for over a year as the region continues to curry favour with investors.
First State Asia Pacific Leaders held onto its place as the fourth most-bought fund for the second consecutive month after falling from second most bought in November.
The £8.3 billion behemoth is a standout performer in the IA Asia Pacific excluding Japan sector, delivering 30% in past 12 months alone compared to 18% from the sector average.
Newton Asian Income was the seventh most-bought fund in January, returning to the top 10 after a one month absence.
Managed by Jason Pidcock since 2005, Newton Asian Income suffered a difficult 2013 after shedding 0.7% compared to a gain of 2% from the sector. However the fund posted much stronger returns in 2014 while its 4.3% annual yield remains attractive for income seekers.
Asia and global focus
Jupiter India tipped the scales for Asia this month as it made its debut in the top 10. Managed by Avinash Vazirani since its launch in 2008, Jupiter India has been buoyed by the return of positive investor sentiment to India following the election of reformist prime minister Narenda Modi last year.
In the 12 months to 10 February Jupiter India has returned 64.1%, making it the second strongest performer among the onshore open-ended India specialist funds, just behind Neptune India which returned 64.2%.
Global funds also remained popular with three making it into the top 10 in January. These included Fundsmith Equity, which was the third most-bought fund for the third consecutive month. Managed by outspoken manager Terry Smith the fund has had a strong year, delivering close to 30% in the past 12 months which makes it the third best performer in a sector of over 260 funds.
Artemis Global Income was the fifth most-bought fund in January, rising from ninth in December. Managed by Jacob de Tusch-Lec, Artemis Global Income is another strong performer, having posted first quartile returns in three of the four full years since its launch in July 2010.
Vanguard LifeStrategy 80% Equities fell from fifth most-bought fund in December to eighth in January. This marks a departure of tracker funds from the top 10 which has witnessed a growing number of these vehicles since mid-2014.
Launched in June 2011, the fund tracks a number of global stocks and bonds through its own index funds, including the Vanguard US Equity Index, Vanguard FTSE Developed World ex-UK Equity and the Vanguard Global Bond Index funds. It has consistently outperformed the IA mixed investment 40 to 85% shares sector since launch and has a low ongoing charges figure of 0.24%.
This article was written for our sister website Money Observer
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%.
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%.
All investment returns are measured against a benchmark to represent “the market” and an investment that performs better than the benchmark is said to have outperformed the market. An active managed fund will seek to outperform a relevant index through superior selection of investments (unlike a tracker fund which can never outperform the market). Outperform is also an investment analyst’s recommendation, meaning that a specific share is expected to perform better than its peers in the market.
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.