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The star sellers of the ISA season

With the new tax year now in full swing, we can reflect on an ISA season that took place against a backdrop of volatile markets and a cacophony of noise about the uncertainty around the UK’s upcoming referendum on its membership of the EU.

Tim Stalkartt Tim Stalkartt
15 April 2016

At a glance, investors stuck with proven managers with strong track records to guide them through market volatility. Income funds also proved very popular, for much the same reason, as investors turned to funds focused on cash generating companies able to pay-out regular dividends.

Below, we count down in detail the top 15 most popular funds with clients using the Bestinvest Online Investment Service between 1 January and 5 April.

At a glance: The most popular funds selected by clients using Tilney Bestinvest’s Online Investment Service over the “Isa Season” (1 January to 5 April 2016):

 

Fund name

Tilney Bestinvest rating

1.

CF Woodford Equity Income

 

2.

Tilney Bestinvest Growth Portfolio

No rating

3.

Fundsmith Equity

 

4.

Threadneedle UK Equity Income

 

5.

Threadneedle European Select

 

6.

Tilney Bestinvest Aggressive Growth Portfolio

No rating

7.

Stewart Investors Asia Pacific Leaders

 

8.

HSBC American Index

 

9.

Liontrust Special Situations

 

10.

AXA Framlington UK Select Opportunities

 

11.

Standard Life Global Absolute Return Strategies

 

12.

Henderson UK Property

 

13.

Legg Mason Japan Equity

 

14.

Fidelity MoneyBuilder Income

 

15.

Vanguard Life Strategy 80% Equity

No rating

The Vanguard Life Strategy 80% Equity fund snuck in at number fifteen, a fund that does exactly what it says on the tin by consisting of 80% equity securities and 20% fixed income securities. The underlying portfolio is wholly made up of Vanguard index tracker funds.

Following on at number fourteen was the Fidelity MoneyBuilder Income fund, an investment grade corporate bond fund co-run by respected manager Ian Spreadbury and Sajiv Vaid, who made a name for himself as a bond manager at Royal London Asset Management. The fund predominantly invests in quality UK corporate bonds, but the fund may also invest up to 25% in gilts or other developed market government securities.

The high-octane Legg Mason Japan Equity fund is in at number thirteen, after delivering blistering performance that has kept it at the top of the Japanese sector over the last one, three and five years. The Japanese stock market has fallen for three straight months now, and fund manager Hideo Shiozumi – who has been managing Japanese investments for 40 years – expects the overall market to be sluggish in the near term. His focus is on growth companies of the so-called ‘New Japan’, which includes areas such as healthcare and information technology.

Sitting at twelve is the Henderson UK Property fund, which invests in high-quality commercial properties with strong tenants on long leases. The fund has been very active in managing its properties this year, recently letting out two floors in the iconic Zenith Building in Manchester and securing a 20-year lease with fast-food outlet KFC for another development, also in Manchester. 58% of the exposure is to London and the south east of England.

It’s fitting that only two ahead of the Legg Mason Japan Equity fund should be the Godzilla-sized Standard Life Global Absolute Return Strategies (GARS) at number eleven, an umbrella for 34 underlying investment strategies encompassing equities, bonds, and currencies. ‘GARS’ currently sits at an enormous £26.2 billion, and its success has spawned a number of competitors from the likes of Invesco Perpetual, Aviva and JP Morgan.

At number ten was the AXA Framlington UK Select Opportunities fund, run by veteran manager Nigel Thomas, who has been picking UK stocks for three decades. The volatility caused by the Brexit debate has been useful, according to Thomas, in allowing him to top up holdings in his favourite companies, such as ITV and online property group Rightmove, as share prices have weakened. Thomas expects the UK to vote to remain within the EU, but expects to see continued uncertainty in parallel with 2014’s Scottish independence referendum.

Continuing into the top ten, the Liontrust Special Situations fund is at number nine. Co-managers Anthony Cross and Julian Fosh pursue an ‘Economic Advantage’ approach. which involves selecting companies with resilient characteristics such as owning intellectual property, having strong distribution channels or being able to secure repeat business. One such example is EMIS Group which provides IT systems for the NHS. This fund has historically performed well in tough markets, despite a relatively high exposure to smaller companies.

The HSBC American Index fund, an index tracker, ranked eighth place. With even Warren Buffet, the US investment guru, advocating the use of trackers for accessing the US markets it is no surprise that many investors use trackers for their US allocations. The fund has a very low ongoing-charges figure of just 0.08%.

Another ever-present fund on our best seller lists is the Stewart Investors Asia Pacific Leaders fund, which takes its place at number seven. Current manager Angus Tulloch, who came first place in last years’ Tilney Bestinvest Top 100 Fund Managers report, will be handing the reigns over to David Gait (15th) in July of this year, but he will retain a place on the fund’s wider management team. Gait is a worthy successor, with a strong track record running the firm’s Asia, Emerging Markets and Worldwide Sustainability funds. The fund continues to have a high weighting to India (26%) and very little exposure to China.

At number six is the Tilney Bestinvest Aggressive Growth Portfolio. The portfolio follows an adventurous strategy with large exposure to shares in smaller companies and overseas markets, and may appeal to investors with a high tolerance for risk and a long investment time horizon.

At number five is a fund that we have long championed as the top choice for a core European equity holding, the Threadneedle European Select fund. Manager Dave Dudding’s philosophy has been described at various points as both ‘buy and hold’ and ‘get rich slowly’, and his defensive style sticks to consumer staples from big global brands like L’Oreal and global brewing behemoth AB InBev.

Moving closer to the summit of our ISA season top sellers list, we see another Threadneedle fund sitting pretty at number four. Threadneedle UK Equity Income continues the trend of investors looking to seasoned hands to manage their money. Manager Richard Colwell is also looking to use recent market weakness to add to the fund’s favoured names.

Fundsmith Equity’s manager Terry Smith has made a name for himself as a charismatic and no-nonsense investor. His straight-talking approach has made him popular with investors, and his fund is in at number three, having enjoyed a strong start to the year, so far beating its MSCI World benchmark by 4.5%. Strong contributions in March from Newcastle-based business solutions firm Sage have kept the fund at the top of the charts.

In at number two is the Tilney Bestinvest Growth portfolio. This fund takes a less adventurous approach than Aggressive Growth, but is still designed for investors with a long-term horizon and high tolerance for risk.

There are no prizes for guessing who tops our chart of best sellers over the ISA season. It is of course the irrepressible Woodford Equity Income fund, run by Neil Woodford, the most well-known fund manager in the UK today. Since its launch less than two years ago, the fund has ballooned to a beefy £8.28 billion as investors continue to put their faith in him. The fund continues to have a high exposure to both tobacco (Imperial Brands, British American Tobacco and Reynolds American) and healthcare companies (AstraZeneca, GlaxoSmithKline and Roche).

Topics

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a guide to future performance.

Different funds may carry varying levels of risk depending on the geographical region and industry sector(s) in which they invest. You should make yourself aware of these specific risks prior to investing.

The property market can be illiquid; consequently, there can be times when investors will be unable to sell their holdings. Property valuations are subjective and a matter of judgement.

Due to their nature, specialist funds can be subject to specific sector risks. Investors should ensure they read all relevant information in order to understand the nature of such investments and the specific risks involved.