Jason Hollands, Managing Director at Tilney Bestinvest comments on the funds that proved most popular with clients using Bestinvest’s Online Investment Service in April.
1. Woodford Equity Income
The best-selling fund throughout the 2016 ISA season, Woodford Equity Income is showing no signs of losing its popularity with investors despite a tougher quarter for relative performance as commodity stocks bounced back. Neil Woodford believes this commodity rally is unsustainable and will prove short-lived and is sticking with dependable growth companies. Tobacco stocks Imperial Brands and Reynolds American, which the fund has big holdings in, also had a tough month but Woodford remains a fan of their exceptional ability to generate cash for shareholders.
2. Fundsmith Equity
City maverick Terry Smith has continued to build his fan base. Investors piled £604million into his Fundsmith Equity fund over the first quarter of 2016, attracted by his simple ‘no nonsense’ investment process.
The fund invests in quality growth companies on a global basis, and currently has 59.5% exposure to US companies and 24.2% to the UK. Top contributions in April came from medical technology manufacturer C.R. Bard and multinational financial services corporation Visa, while Microsoft and Unilever made up some of the top detractors.
3. Tilney Bestinvest Growth Portfolio
The Tilney Bestinvest Growth portfolio is designed for investors with a higher tolerance for risk and a long investment time horizon. Around two-thirds of the portfolio is invested in shares, including exposure to smaller companies, emerging markets and Asia. The remainder of the fund is diversified across bonds, commercial property and other areas to reduce stock market risk.
4. Stewart Investors Asia Pacific Leaders
Consistently appearing on our list of most popular funds the Stewart Investors Asia Pacific Leaders fund has a stellar long-term record (beating its benchmark by 121% over 10 years). It has a very large holding in India compared to the index allocation (23.9%, compared to 7.4%) which is currently a relative bright spot in the region, and tiny exposure to China (1.6%, compared to 21.9%) where many market watchers are concerned about the vast build-up of debt.
5. Tilney Bestinvest Aggressive Growth Portfolio
The Tilney Bestinvest Aggressive Growth Portfolio takes a more adventurous investment approach than the Growth portfolio, with a larger exposure to shares in small companies and overseas companies. It is also designed for investors with a high tolerance for risk and a long investment time horizon.
6. Threadneedle European Select
Threadneedle European Select manager Dave Dudding is known for his defensive style and true-to-form he recently sold his fund’s holding in Eurotunnel, owing to risks posed by the twin possibilities of Brexit and further terrorist attacks within Europe. Going forward, Dudding will be keeping a wary eye upon the ongoing political uncertainty in Spain, still without a government five months after last year’s General Election, but will be encouraged that many European companies away from the financial sector have so-far retained strong balance sheets and cash flows.
7. Threadneedle UK Equity Income
Earlier this month Columbia Threadneedle announced that Richard Colwell, manager of the Threadneedle UK Equity Income fund, would be replacing retiring industry veteran Leigh Harrison as Head of UK Equities at the firm. There’s no need for investors to fear however, as the Colwell will remain in charge of the £3.2bn UK Equity Income fund. Large holdings include tobacco giant Imperial Brands, healthcare groups AstraZeneca and GlaxoSmithKline and WM Morrison Supermarkets.
8. Liontrust Special Situations
Co-managers Anthony Cross and Julian Fosh have managed to keep the Liontrust Special Situations fund producing some of the highest returns in the Investment Association UK All Companies sector during a five year period of increased volatility. The fund invests in companies both large, medium sized and small with holdings including consumer giants such as Diageo, the manufacturer behind globally popular alcoholic drinks such as Smirnoff vodka and Guinness stout and EMIS Group, a provider of software and IT to the NHS.
9. HSBC American Index
Investment guru Warren Buffett used the recent annual meeting of his multinational holding company Berkshire Hathaway, attended by an incredible 35,000 people, to repeat once again his belief that investors should use cheap tracker funds for the best value long-term returns. The HSBC American Index fund follows the S&P 500 index, notoriously hard for active managers to beat, and has a very low ongoing charges figure of 0.08%.
10. AXA Framlington UK Select Opportunities
AXA Framlington UK Select Opportunities is managed by one of the most experienced fund managers within the UK All Companies sector, Nigel Thomas. His view that current uncertainties in the UK will stunt growth has pushed him towards companies that convert a large proportion of their profits into cash to continue paying dividends, a harder task than before seeing as firms such as Anglo American, Rolls Royce and J. Sainsbury’s have all recently announced the cutting of annual dividends. One such holding is ITV, a firm favourite of Thomas’ that accounts for 5% of the fund. He believes that the ever-growing amount that major brands spend on TV advertising proves fears about the death of free-to-air TV are “surely some sort of nonsense".
At a glance: The most popular funds selected by clients using Tilney Bestinvest’s Online Investment Service in April 2016:
Find out more about how we rate funds here: /investment-research/our-research-approach
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