May's 10 most-bought funds
Of Interactive Investor's top 10 most-bought funds in May, four were Vanguard tracker funds, with the Vanguard FTSE UK All Share Index tracker making its debut as the ninth most-bought fund during the month.
The passive investment specialist's global mixed-asset vehicles also remained popular, with the Vanguard LifeStrategy 80% Equities fund moving up one place from fifth most-bought fund in April to fourth in May.
Vanguard LifeStrategy 60% Equities also climbed one place to seventh most-bought fund last month compared to eighth most-bought fund in April, while Vanguard LifeStrategy 100% Equities dropped two places to eight most-bought fund in May compared to April.
Passive versus active
The rising popularity of index trackers - which invest 'passively' by replicating the exposures of global indices and are generally significantly cheaper than traditional 'actively' managed funds - is also reflected in recent figures from the Investment Association (IA).
According to the IA, in March trackers recorded a record £938 million in net inflows, helping to push their overall share of industry funds under management to 12.1%, up from 9.9% in April 2014.
Commenting in the rising popularity of tracker funds, Rebecca O'Keeffe, head of investing at Interactive Investor, says: "Competition between passive providers means that investors have more choice at a lower price than ever before and this is translating into a significant increase in tracker investing. The low-cost portfolios are straightforward and represent real value for money as well as delivering on performance."
Despite trackers dominating this month's league table, active management remains popular with investors, with headline names attracting the most inflows. Top of the pile is Neil Woodford, whose fund CF Woodford Equity Income was the most-bought fund on Interactive Investor for the 10 consecutive month in May.
The fund has dominated bestseller lists since its launch last year as investors have flocked to one of the industry's best-performing managers. Launched with £1.6 billion of assets under management in June 2014, the fund is now £6.2 billion in size and is the best-performing UK equity income fund over the past 12 months.
On Woodford's reign over the top spot, Patrick Connolly, certified financial planner at Chase de Vere, says: "Usually the most popular funds tend to be those which have performed the best or have been the most hyped and the most promoted by the big execution-only brokers.
"Thus it's no surprise to see the Woodford fund has been the most bought. Neil Woodford has an excellent long-term track record and this fund has been very heavily tipped by the execution-only firms, particularly Hargreaves Lansdown."
AXA Framlington Biotech and Fundsmith Equity also remain popular with investors. In May AXA Framlington Biotech hung on to its place as second most-bought fund for the sixth consecutive month while Fundsmith Equity enjoyed its third month as third most-bought fund.
Artemis Global Income was the fifth most-bought fund in May, falling one place from April. Managed by Jacob de Tusch Lec since its launch in 2010, the fund has notched up consistent first-quartile performance; over three years to 2 June it has returned 85.2% compared to just 50.5% from the IA's global equity income sector.
Neptune UK Mid Cap was the sixth most-bought fund in May, rising four places since April as manager Mark Martin continues to capitalise on improving sentiment toward medium-sized companies.
Neil Woodford's former charge, Invesco Perpetual High Income, was the 10 most-bought fund last month, falling one place from April as Woodford's former protégé Mark Barnett continues to deliver top performance.
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%.
Describes the relationship between a client and a stockbroker or independent financial adviser whereby the broker or adviser acts solely on the client’s instructions and doesn’t offer any advice on which shares to invest in or financial products to buy and simply “executes” the wishes of the client, regardless if they are judged to be sound or wrong. Other types of broking service offered are advisory (whereby the client/investor makes the final decisions, but the broker offers advice) and discretionary (whereby the broker manages the portfolio entirely and makes all the decisions on behalf of the client).
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).