Archived article: This article was correct at the time of publishing. Tax, investments and pension rules can change over time so the information below may not be current.

Where our clients invested in October 2014

October proved to be a volatile month for global markets as a combination of concerns – the United States ending its Quantitative Easing stimulus programme, weak growth and low inflation in the Eurozone, the deceleration of China and geopolitical crisis from Hong Kong to the Iraq/Syria – conspired to cause some jitters after many months of very low volatility. It’s important to remember that markets never go up in a straight line relentlessly and at certain points some steam needs to be let out of the pressure cooker. When markets dip, this can often present a buying opportunity for long term investors.

Jason Hollands Jason Hollands
10 November 2014

Among clients who make their own decisions using our Online Investment Service, we observed three themes in October: the continued popularity of UK equity income funds, rising interest in multi-asset funds and increased use of ‘passive’ investments for investors wanting exposure to large US and UK companies.

Equity income remained a firm favourite

UK equity income funds, which focus on dividend-generating companies, have been firm favourites with investors across the UK fund industry for several months now. Amongst our clients, the two most popular investments during October were both UK equity income funds. The top choice was the three-star rated CF Woodford Equity Income fund. This fund, managed by former Invesco Perpetual stalwart Neil Woodford, has proven hugely popular with investors since its launch in June, growing to over £3 billion in size within a few months.

The second most popular fund was another UK equity income fund, the Threadneedle UK Equity Income fund, which has long been one of our most highly rated funds, holding a coveted  five stars from our research team. For more information on income-generating funds, read the feature on them in the latest edition of Bestinvestor magazine here.

Letting the experts do the hard work

Funds which invest across different asset classes were also popular during the month of October both across the wider industry and our clients, perhaps reflecting a preference for diversification during times of volatility. Amongst our Online Investment Service clients the Standard Life Investments Global Absolute Return Strategies fund, which invests in around 30 underlying strategies across various asset classes, remained a top-ten choice.

We also saw an increasing number of Online Investment Service clients choose our own Multi-Asset Portfolios (MAP), with four of these funds amongst the 20 most popular choices during October. The MAP funds are aimed at investors who want our team of experts to select a portfolio of funds for them, to achieve diversification across different markets and fund managers and to make changes when the team feels necessary – taking the hassle out of managing a portfolio yourself. Each MAP fund which has a different goal and risk profile, invests across around 20 funds on behalf of investors.

If it’s good enough for Warren Buffet, could an S&P 500 index tracker find a place in your ISA?

We also saw a noticeable spike in the use of passive funds - index trackers and Exchange Traded Funds – during October, perhaps as some investors saw the volatility as a chance to buy into markets and hope to catch a bounce?

These choices represented 5 of the 20 most popular investments during the month which is much higher than usual. There are certain markets, such as US larger companies, which are notoriously difficult for fund managers to beat, so using tracker funds, such as HSBC American Index which has annual costs of just 0.18% to access this market has become very common place. Indeed, even the legendary ‘Sage of Omaha’ Warren Buffet, the world’s famous investor, has recently confessed that when he dies his he will leave instructions to his trustees to invest much of his fortune in an S&P 500 index fund on behalf of his wife.

Thankfully, in the other markets such as the UK, there are experienced fund managers with strong track records of beating delivering index-beating returns. Amongst those who continued to draw support from our clients during October were Antony Cross and Julian Fosh’s Liontrust Special Situations fund and the  AXA Framlington UK Select Opportunities fund managed by veteran stock-picker Nigel Thomas.






CF Woodford Equity Income Fund

UK Equity Income



Threadneedle UK Equity Income

UK Equity Income



IFSL - Bestinvest Income & Growth Portfolio

Unclassified (Multi-Asset)



IFSL - Bestinvest Aggressive Growth Portfolio

Unclassified (Multi-Asset)



iShares FTSE 100 UCITS ETF

Exchange Traded Product


Fundsmith Equity Fund




Standard Life Inv Global Absolute Return Strategies

Targeted Absolute Return



IFSL - Bestinvest Growth Portfolio

Unclassified (Multi-Asset)



HSBC American Index

North American



First State Asia Pacific Leaders Fund

Asia Pacific ex Japan



Liontrust Special Situations

UK All Companies



AXA Framlington UK Select Opportunities

UK All Companies



HSBC FTSE 100 Index

UK All Companies



Fidelity Index US Fund

North America



Newton Global Higher Income




IFSL - Bestinvest Defensive

Unclassified (Multi-Asset)



Threadneedle European Select Fund

Europe ex UK



Henderson UK Property




Scottish Mortgage Investment Trust

Global Growth



Fidelity UK Index

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.