Moneywise's First 50 Funds dominate December's 10 most-bought funds

Marina Gerner
6 January 2017

Fundsmith Equity, one of Moneywise's First 50 Funds, took the top position in the list of most-bought funds on  Moneywise's sister website Interactive Investor for the ninth consecutive month.

It has been the most-bought fund ever since it toppled CF Woodford Equity Income nine months ago (also a member of our First 50 Funds). The Fundsmith Equity fund has over half of its assets in US equities and is managed by highly regarded investor Terry Smith.

On the whole the names in the table of 10 most-bought funds for December remain unchanged from November. Neil Woodford's eponymous open-ended fund, which launched in June 2014, took second place. The CF Woodford Equity Income fund, which invests in UK company shares, gained 4.9% over one month to 2 January and 6% over six months.

The fund remains hugely popular despite underperforming the Investment Association's UK equity income sector, which gained 9.7% over six months.

Shift in sentiment

That reflects a shift in sentiment in the face of expectations of greater opportunities for growth in 2017, away from so-called 'bond proxy' stocks - big, high-quality, dividend-paying companies - and towards cheaper and more cyclical holdings likely to do well in a more reflationary, growth-oriented environment.

Half of the most-bought funds in December were passive ones. The third place in the list was taken by Vanguard LifeStrategy 80% Equity, which focuses on North American equities, UK equities and European ex UK equities as well as global bonds.

Lindsell Train Global Equity, another First 50 Fund, was fourth on the list. Jointly managed by Michael Lindsell and Nick Train since its launch in March 2011, the fund returned 6.3% over six months to 2 January.

Like Fundsmith Equity it focuses mainly on defensive, high-quality stocks, which have become increasingly sought-after and expensive over recent years but have underperformed over the last few months as investors have refocused to some extent on growth opportunities.

It was closely followed by a couple of passive equity funds, from specialist tracker fund company Vanguard. The Vanguard LifeStrategy 100% Equity fund climbed three spots to take fifth place in December's list, while Vanguard LifeStrategy 60% Equity took sixth place - again, both are part of our First 50 Fund selection.

This is also true for Artemis Global Income (another First 50 Fund), which was the seventh of the most-bought funds in December. It benefits from a global spread, as  one third of its holdings are in US equities, about 13% in UK equities and 8% in German equities. Read our interview with the fund's manager.

The eighth place in the top 10 was taken by Vanguard FTSE Developed World ex UK (another First 50 Fund), which has 62% in US equities and 10% in Japanese equities. The ninth place was taken by another tracker, HSBC FTSE All Share Index, which gained 5.9% over one month.

The 10th position was taken by Jupiter India, which dropped four places; despite this fall, the fund gained 3% over the last month and is up an astonishing 114.5% over the last three years.

With this year's looming Brexit negotiations and potential political change across Europe, investors have been turning to emerging market funds, which enjoyed a new spurt of life in 2016, though there is continuing uncertainty as to what president-elect Donald Trump's protectionist policies will mean for some emerging economies. In India specifically, new tax reforms are seen as a positive development for the economy.

Read Moneywise columnist Darius Dermott's advice on adding niche funds to weather 2017's potentially stormy stock markets


RankFundIA sectorChange since NovemberTotal 1m return to 2 Jan (%)Total 3yr return to 2 Jan (%)
1Fundsmith Equity*Global--7.383.5
2CF Woodford Income*UK equity income--4.9n/a
3Vanguard LifeStrategy 80% EquityMixed investment 40-85% shares14.337.7
4Lindsell Train Global Equity*Global-15.263.9
5Vanguard LifeStrategy 100% Equity*Global35.242.6
6Vanguard LifeStrategy 60% Equity*Mixed investment 40-85% shares13.432.9
7Artemis Global Income*Global Equity Income-25.847.4
8Vanguard FTSE Developed World ex UK*Global2553.5
9HSBC FTSE All Share IndexUK all companies--5.918.6
10Jupiter IndiaSpecialist-43114.5

* Denotes a First 50 Fund.

Source: Interactive Investor

This article is an edited version of a story originally written for our sister website, Money Observer.

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