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Where did our clients invest in August 2014?

August is typically a quiet month, as investors head away for their summer holidays. But for some clients it was a time to put new money to work into the markets, using the recently introduced £15,000 New ISA allowance.

Jason Hollands
23 September 2014

Amongst those investing in August, the single most popular choice was the giant Standard Life Investments Global Absolute Return Strategies fund. This £21 billion leviathan is in effect an umbrella for around 30 underlying investment strategies. Together the strategies aim to achieve positive returns across different market environments with low volatility.

However, in aggregate it was UK equity funds that remained the top asset class with investors during the month. Funds in in the UK All Companies and UK Equity Income sectors accounted for a quarter of new investment inflows during August.

The top choice for accessing the UK market was the Threadneedle UK Equity Income fund, which we rate five stars. This fund, which is managed by duo Leigh Harrison and Richard Colwell, has long been one of our top-rated ‘core’ UK equity funds. It aims to provide a combination of long-term capital growth and a dividend yield higher than the UK stock market and is managed with a more pragmatic style than the CF Woodford Equity Income fund, another popular choice.

The second most popular UK equity fund was the Liontrust Special Situations fund; another fund rated five stars by our research team. This fund is focused firmly on long-term capital growth rather than income. The fund invests across companies of varying sizes, so typically it has much more in small and mid-sized companies than the FTSE All Share Index. The managers Antony Cross and Julian Fosh invest in companies that they believe have an “economic advantage” – such as intellectual property, or a strong brand – that are hard for competitors to replicate, enabling their earnings to prove resilient through the ups and downs of the economic cycle.

Strategic bond funds most popular for fixed income investing

As the debate over when the Bank of England and US Federal Reserve might start raising interest rates continues, investors have remained wary about fixed income, recognising that as rates start rising, government bond yields are likely follow suit – which may have knock-on impact to corporate bonds.

Given the prospect of adjustments in fixed income markets, in August investors continued to opt to take their exposure to the asset class through “strategic” bonds funds, those where the manager has a high degree of flexibility to invest across the fixed income universe, from gilts to high yield bonds and adapt as circumstance change. Here the two most popular choices were the giant £22bn M&G Optimal Income fund and the more conservatively managed Kames Strategic Bond fund.

Scottish Mortgage was top investment trust choice

Although the 20 most popular investments in August were all open-ended funds, clients were active buyers of investment trusts during the month as well. Here the top choices were Scottish Mortgage Investment Trust, Scottish Oriental Smaller Companies Trust, BlackRock World Mining, Genesis Emerging Markets and TR Property Investment Trust.

While to some the mere name Scottish Mortgage Investment Trust may conjure up the image of a conservative, traditional investment fund, this trust, managed by veteran stock picker James Anderson of Edinburgh-based Baillie Gifford is far from stuffy. Scottish Mortgage takes high conviction positions in growth companies from across the globe. Its top ten holdings include Chinese internet search engines Baidu and internet service provider Tencent; US-listed genetics firm Illumina and online retailer Amazon.

Finally, our own Multi-asset Portfolio funds drew inflows from investors wanting to delegate fund selection and portfolio management to our CIO and research team, with the IFSL –Bestinvest Growth Portfolio amongst the ten most popular funds. This fund invests in roughly 20 underlying funds across a range of asset classes. For more information click here.

20 MOST POPULAR FUNDS IN AUGUST

 

FUND

SECTOR

BESTINVEST RATING

1

Targeted Absolute Return

 

2

UK Equity Income

 

3

UK All Companies

 

4

North American

 

5

£ Strategic Bond

 

6

£ Strategic Bond

 

7

Property

 

8

UK All Companies

 

9

Unclassified (Multi-Asset)

 

10

UK Equity Income

 

11

£ Strategic Bond

 

12

Europe ex UK

 

13

Targeted Absolute Return

 

14

Asia Pacific ex Japan

 

15

Global Equity Income

 

16

£ High Yield

 

17

Europe ex UK

 

18

Global

 

19

UK Smaller Companies

 

20

UK All Companies


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. Prevailing tax rates and reliefs are dependent on your individual circumstances and are subject to change. This article does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. 

Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. Underlying investments in emerging markets are generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could both increase or decrease. These investments therefore carry more risk. Please note that historical or current yields or returns should not be considered reliable indicators of future performance.