Jason Hollands, Managing Director at Tilney Bestinvest comments on the funds that proved most popular with clients using Tilney Bestinvest’s Online Investment Service in August.
1. CF Woodford Equity Income
“The Woodford Equity Income remains a firm favourite with investors who make their own decisions and continues to takes the top spot for new investments. Now just over a year old, the fund has enjoyed a very strong run sitting at the top of its sector. Investing mainly in large-cap UK equities, manager Neil Woodford continues to be a big fan of tobacco giants Imperial Tobacco, British American Tobacco and Reynolds American.
“Investors who already have significant exposure to larger company weighted UK equity income funds might consider dovetailing these with funds which have a greater emphasis on medium and smaller sized businesses such as the Standard Life UK Equity Income Unconstrained fund or the Unicorn UK Income fund, both of which are rated by our research team.”
2. First State Asia Pacific Leaders
“The recent slide in Chinese equities has had a negative impact across wider Asian markets, with funds across the board experiencing losses over the last quarter. Yet amongst these the First State Asia Pacific Leaders fund, our top rated fund in this area, has held up well and significantly beating its peers during recent volatility. Crucially, the fund is heavily overweight India (24.4% of the portfolio), which last year elected a reformist majority Government, while very underweight mainland China (2.4%).”
3. Threadneedle UK Equity Income
“This perpetually popular fund has long held a five-star rating from our research team as a core choice for UK equity income exposure. Managed on a total return basis by Leigh Harrison and Richard Colwell, stocks are held both for their dividend and growth potential. Top holdings in the fund include Astrazeneca, Imperial Tobacco Group and GlaxoSmithKline.”
4. Tilney Bestinvest Income & Growth Portfolio
“The Income & Growth portfolio is one of seven multi-asset portfolios offered by Tilney Bestinvest, each one designed to meet an investors needs whatever they may be. Income & Growth aims to deliver income and capital growth over the long term and may appeal to investors with a medium tolerance to risk. A significant proportion of the fund is invested into government, corporate and high yield bonds.”
5. Threadneedle European Select Fund
“There has been a notable rise in investor interest when it comes to European equities due to European Central Bank’s Quantitative Easing stimulus programme, and this is reflected by the consistent place the five-star rated Threadneedle European Select fund has held in our most popular funds this year. The fund is tilted towards blue-chip large-cap stocks with strong brands and resilient earnings holding well-known companies like cosmetics group L’Oreal and Anglo-Dutch consumer giant Unilever. It is also heavily weighted towards the healthcare sector (23.7%).
“Investors looking for funds with greater exposure to Europe’s domestic economies might also consider funds focused on mid and small-sized companies, such as Baring Europe Select and F&C European Small Cap ex UK.”
6. HSBC American Index
“With the S&P 500 Index being notoriously difficult to beat, many investors have given up on active fund managers for their US equity exposure and looked instead to index trackers. This fund has low-cost on-going charges of just 0.18%, minimising the drag impact of costs.
“Investors who are cautious on the US market might however consider alternatives to traditional S&P 500 Index-tracker funds, which weight holdings according to company size, and consider so-called ‘smart beta’ passive funds which weight companies based on fundamental factors such as their revenues, cash flow, dividends and balance sheet. One example is the PowerShares FTSE RAFI 1000 UCITS ETF. ”
7. Woodford Patient Capital Trust
“This investment trust company was launched in April to much fanfare, despite marking a significant departure from manager Neil Woodford’s historical focus on large, blue-chip listed companies. Instead Patient Capital focuses on smaller, often unquoted companies.
“Potential investors should however be aware that at the time of writing Woodford Patient Capital Trust’s shares were trading at a 10.3% premium to their net asset value - so they should check whether the shares are at a premium or discount before deciding whether or not to invest.”
8. Tilney Bestinvest Growth Portfolio
“The second of Tilney Bestinvest’s multi-asset portfolios to feature in this month’s list, the Growth portfolio would suit investors with a long term horizon and a high tolerance to risk. It holds funds investing in smaller companies, overseas markets – including emerging markets and Asia - and high yield bonds.”
9. Artemis Global Income
“Making its first appearance on our most popular list for 2015 is the Artemis Global Income fund. With the fund outperforming its benchmark since its inception, manager Jacob de Tusch-Lec had much cause to celebrate the fund’s fifth anniversary in July. Employing a dynamic investment approach, Lec is able to adjust the portfolio to meet all market conditions, and the fund also benefits from higher weighting to mid-cap stocks than its peer group. While the fund is exposed to all major geographic markets, it is predominantly weighted towards Europe (37%) and North America (35%). A shrewd move by the manager however is to hedge all the currency exposure in-line with the fund’s benchmark – this means that while the fund has been underweight North America, it has still benefitted from the strengthen of the US dollar.”
10. Vanguard FTSE All Share Index Unit Trust
“Also making its debut appearance on the most popular fund list is the Vanguard FTSE All Share Index Unit Trust, which was launched in September 2014. This low-cost tracker has ongoing charges of just 0.08%, and aims to replicate the performance of the 600-plus UK equities that comprise the FTSE All-Share.
“UK index trackers have become increasingly popular over the last five years, ironically a period when most UK active managers have outperformed leaving FTSE All Share trackers in the bottom quartile of the IA UK All Companies sector over 1, 3 and 5 years. We ascribe this to the strong performance of mid-cap and smaller companies over this period, areas where many active managers are overweight, as well as their ability to eschew some of the large commodity companies that sit in the FTSE 100 Index.”
At a glance: The most popular funds selected by clients using Tilney Bestinvest’s Online Investment Service in August 2015:
Find out more about how we rate funds here: /investment-research/our-research-approach