Where did our clients invest in January?

Jason Hollands, Managing Director at Bestinvest looks at the top ten funds that proved most popular with clients using the Bestinvest Online Investment Service in January.

Jason Hollands
15 February 2017

Investor sentiment has a habit of lurching between hope and fear and right now, hope seems firmly back in the driving seat. 2017 has seen developed markets equity indices test new highs and, despite all the talk about political uncertainty in the age of Trump, market volatility has been incredibly low. The Bestinvest service saw a clean sweep for funds focused primarily on equities in the ten most popular funds during the opening month of 2017.

The top choices were:

1.    Tilney Bestinvest Growth Portfolio

The Tilney Bestinvest Growth portfolio proved to be the most popular fund. It is designed for investors with a higher tolerance for risk and a long investment time horizon. It invests into a portfolio of funds selected by our research team. Around two-thirds of the portfolio is invested in equity funds, including exposure to smaller companies, emerging markets and Asia. The remainder of the portfolio is diversified across bond funds, commercial property and other areas to reduce stock market risk.

2.    Fundsmith Equity 

In second place was the Fundsmith Equity fund, managed by the City big gun Terry Smith. Smith has an invest-and-hold strategy focused on a concentrated portfolio of 29 quality growth stocks from across developed markets. He sums this up as: “Buy shares in good companies; don’t overpay; do nothing.” The fund has a high weighting to consumer staples, 34.7%, healthcare, 27.3%, and technology, 24.1%.

3.    CF Woodford Equity Income

Taking the next spot was the eponymous CF Woodford Equity Income fund, managed by Neil Woodford. While his flagship fund dabbles in riskier, small-growth businesses, it primarily focuses on resilient companies that are less affected by the global economic cycle. Longstanding top holdings include healthcare multinationals AstraZeneca and GlaxoSmithKline, and he continues to invest very significantly in the tobacco industry with big positions in industry giants Imperial Brands and British American Tobacco.

4.    Tilney Bestinvest Aggressive Growth Portfolio

In fourth place 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.

5.      Stewart Asia Pacific Leaders

There is a fair amount of caution towards emerging markets and Asia at present given President Trump’s views on raising import tariffs. One fund in this space that continues to draw support from clients however is the Stewart Asia Pacific Leaders fund, a longstanding top rated fund. The fund, managed by David Gait, focuses primarily on investing in large companies with sustainable cash flows and robust balance sheets. Its highest weighting remains India (29.3%) followed by Taiwan (17.6%) but it has negligible exposure to China where concerns persist about the rapid growth of debt.

6.      HSBC American Index

The HSBC American Index fund, a tracker fund that follows the S&P 500 index, has been the most popular choice for investing in the U.S. The US stock market is notoriously hard for active fund managers to beat and this tracker has a very low ongoing charges figure of 0.08%.

7.      Liontrust Special Situations

Managed by Julian Fosh and Anthony Cross, the Liontrust Special Situations fund has long held a highly coveted five-star rating from our research team and has managed to achieve both significant and consistent outperformance over the long term, but with less volatility than the UK market. The fund follows a well-articulated process, called the Economic Advantage approach, that looks for companies able to sustain a higher than average level of profitability for longer than expected. The companies the fund invests in have distinct characteristics, like ownership of intellectual property, strong distribution channels or significant recurring revenue streams whether they are large, medium sized or smaller companies.

8.      Threadneedle UK Equity Income

The Threadneedle UK Equity Income fund is another popular choice for UK equity exposure and was the eighth most popular fund with our Online Investment Service clients. Manager Richard Colwell is well regarded due to his experience and pragmatic approach, and his fund currently has a defensive skew that focuses on total return. It is currently very underweight financials and overweight industrials compared to its FTSE All-Share benchmark. Companies within its top ten holdings include Wm Morrison Supermarkets, BT Group and RSA Insurance Group.

9.      Threadneedle European Select

The Threadneedle European Select fund is consistently in our top 10 list and January 2017 was no different. It retains a bias towards the consumer goods, healthcare and consumer services sectors. Financials are a considerable underweight due to concerns over the European banking sector. The fund aims to seek out companies with strong brands that are less sensitive to price-based competition and as such the fund invests heavily in firms such as Unilever, the multinational consumer brands group, and the world’s largest brewer Anheuser-Busch InBev.

10. Artemis Global Income

The Artemis Global Income fund has reappeared our list after few months absence. Manager Jacob de Tush-Lec takes an unconstrained approach to investing in global equities, encumbered from shadowing an index. This means its top holdings are typically very different from competitor funds which usually hold very large US based companies. Instead, this fund's top holdings include the likes of Norwegian insurance company Storebrand, Italian communication infrastructure company EI Towers and Italian telecom company INWIT.

 

The most popular funds selected by clients using the Bestinvest Online Investment Service in January 2017:

 

Fund name

Bestinvest rating

1.

Tilney Bestinvest Growth Portfolio*

No rating

2.

Fundsmith Equity

★★★★

3.

CF Woodford Equity Income

★★★

4.

Tilney Bestinvest Aggressive Growth Portfolio*

No rating

5.

Stewart Investors Asia Pacific Leaders

★★★★

6.

HSBC American Index

★★★

7.

Liontrust Special Situations Fund

★★★★★

8.

Threadneedle UK Equity Income

★★★★★

9.

Threadneedle European Select

★★★★★

10.

Artemis Global Income

★★★★

*As a matter of policy Tilney does not star-rate its own in-house managed Multi-Asset Portfolio funds. However each of these invests in a diversified selection of circa 20 top-rated underlying funds selected by the Tilney research team.

Find out more about how we rate funds here: https://www.bestinvest.co.uk/research/fund-rating-changes-and-launches

Important Information:

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 article 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 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.

Smaller companies shares can be more volatile and less liquid than larger company shares, so smaller companies funds can carry more risk.

Tracker funds track the performance of a financial index and as such their value can go down as well as up, much like shares, and you can get back less than you originally invested. Some are more complex so you should ensure you read the documentation provided to ensure you fully understand the risks.