July's 10 most-bought funds
UK small and medium-sized companies are once again finding favour with investors as Fidelity UK Smaller Companies joins Neptune UK Mid-Cap in our sister website Interactive Investor's top 10 most-bought funds table.
Fidelity UK Smaller Companies was the 10th most-bought fund on Interactive Investor in July, marking the fund's first appearance in the top 10 since March 2013.
Managed by small-cap star Alex Wright, Fidelity UK Smaller Companies has been a consistently strong performer since its launch in February 2008.
In the six years to 1 March 2014, the fund returned 260% compared to an average of 97% from the Investment Association's UK smaller companies sector, making it the best-performing UK smaller companies fund over the period.
Returns have dwindled since the second half of 2014 due to a sell-off in UK smaller companies that negatively affected most funds and investment trusts in the sector.
However, Wright has also not benefited from the resurgence of smaller companies seen this year, delivering third-quartile returns over six months and fourth over three months.
Fidelity UK Smaller Companies joins medium-sized company specialist fund Neptune UK Mid-Cap, which was the fourth most-bought fund in July.
The top-performing fund, managed by the highly rated Mark Martin, re-entered Interactive Investor's top 10 in February after a similar period of absence to Fidelity UK Smaller Companies, indicating that private investors are once again looking towards riskier equities after a disappointing year of returns in 2014.
Tracker funds also appear to be increasingly attracting private investors, with four of the top 10 most bought in July run by passive investment specialist Vanguard. Multi-asset fund of funds tracker Vanguard LifeStrategy 80% Equities was the fifth most-bought fund, moving down one place from fourth most bought in June.
In seventh place was Vanguard LifeStrategy 100% Equities - a global tracker from the same range that is also a regular constituent of Interactive Investor's top table. Vanguard FTSE UK All Share Index and Vanguard FTSE Developed World ex UK Equity Index were the eighth and ninth most-bought funds in July, switching respective positions from June.
With ongoing charges figures typically below 0.3%, index-tracking funds have proved increasingly popular of late, with their share of the UK funds market rising to 12.1% as at the end of June compared to 10.4% in June 2014.
Any charge, however, will mean that most index trackers tend to underperform their respective benchmarks and sectors as they seek only to match an index.
Of the Vanguard funds in the top 10, only Vanguard LifeStrategy 80% Equities has delivered returns significantly above its benchmark and its sector. The fund has delivered 10% over one year and 37% over three years to 31 July, placing it in the first quartile of the IA mixed investment 40 to 85% shares sector over both periods.
Elsewhere in the top 10, firm favourites have retained their grip on the top spots. CF Woodford Equity Income was the most-bought fund in July for the 13th consecutive month since its launch in June 2014 as Neil Woodford's reputation and star status continue to draw investors.
Axa Framlington Biotech and Fundsmith Equity were the second and third most-bought funds in July for the eighth and fifth consecutive months respectively.
Both funds have delivered strong returns over the past three years. Axa Framlington Biotech has enjoyed a surge in the biotechnology sector since 2012, returning 184% in the three years to 31 July while Terry Smith's global equity fund has rarely left the first quartile since its launch in late 2010.
Artemis Global Income was the sixth most-bought fund last month for the second consecutive month. The fund has remained consistently in the top 10 over the past year as manager Jacob de Tusch Lec continues to deliver both strong total returns and an attractive level of income.
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%.
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.