Neil Woodford’s new income fund has climbed up our top 10 table, but has been unable to dislodge Terry Smith from top spot.
In targeting a yield of 5 per cent, Neil Woodford’s second income fund was expected to fly off the shelves – and true to form this has played out, with £553 million raised during its launch offer period.
It has also been a popular choice among investors who use our sister website Interactive Investor, with the new offering, CF Woodford Income Focus, climbing up our top 10 most-bought fund league table into the silver medal position, having been the second most-purchased fund in April. In March, prior even to the fund launching, the fund went straight into eighth spot.
Woodford’s new income fund was unable to dislodge Terry Smith’s Fundsmith Equity from the top spot, however. The Money Observer Rated Fund has been in pole position for 13 consecutive months, with investors buying into Smith’s simple but simple but effective investment philosophy.
His approach is to pick a small selection of ‘high quality growth’ shares and stick with them. Recently, at an investor meeting, Smith detailed some of the secrets to his success, naming the four characteristics that he looks for when deciding whether or not to invest in a company.
Continuing its recent climb up the table is Jupiter India, which has risen from fifth to third spot. Back in February the fund was in eighth position. In general appetite for emerging market funds is improving.
This, and the strong recent performance of the Indian stock market, appears to have drawn investors in. India’s Sensex stock market index hit a record high at the end of April. There are various factors at play behind India being one of the strongest stock market performers so far this year, but new tax reforms are seen as a positive development for the economy, promoting a surge in demand from overseas investors.
Slipping from second to fourth position is CF Woodford Equity Income, which was launched almost three years ago. Investors who got in on the ground floor have been rewarded. The fund is up 35.6 per cent, while in contrast the average fund in the Investment Association’s UK Equity Income sector is up 22 per cent, according to analyst FE Trustnet.
Completing the top five is Lindsell Train Global Equity, dropping one place. Fund managers Michael Lindsell and Nick Train run a fund typical of the Lindsell Train stable, with the managers aiming to achieve its objective of long-term income and capital growth by constructing a concentrated portfolio of 'exceptional' companies. Consumer goods firms Unilever and Diageo are the two biggest holdings at present, followed by Heineken.
Four of the remaining five funds in our top 10 list are tracker funds: Vanguard LifeStrategy 80% Equity (dropping from third to sixth), Vanguard LifeStrategy 100% Equity (remaining in seventh), HSBC FTSE All Share (remaining in ninth) and Vanguard FTSE Developed World ex UK (remaining in tenth).
Investors buy tracker funds for their simplicity and low costs. In addition, a growing number of investors, particularly those who are younger, prefer the certainty of buying a fund that will do what it says on the tin in following the fortunes of a market index, as opposed to counting on an active fund manager to deliver the goods and outperform the index.
The outlier is Artemis Global Income, which has slipped from sixth to eighth. Unlike many of its peer group, it keeps its UK content relatively low, so for income investors seeking diversification it will complement rather than replicate existing UK equity income holdings.
TOP 10 MOST POPULAR FUNDS
|Rank||Fund||IA Sector or benchmark||Change since March||Total return 1m to 2 May (%)||Total return 3yr to 2 May (%)|
|2||CF Woodford Income Focus||Specialist||+6||n/a||n/a|
|4||CF Woodford Equity Income||UK Equity Income||-2||1.1||n/a|
|5||Lindsell Train Global Equity||Global||-1||1.1||79.9|
|6||Vanguard LifeStrategy 80% Equity||Mixed Investment 40%-85% Share||-3||-1||40.4|
|7||Vanguard LifeStrategy 100% Equity||Global||---||-1.4||46.9|
|8||Artemis Global Income||Global Equity Income||-2||-2.3||48.5|
|9||HSBC FTSE All Share Index||FTSE All Share||---||-0.1||21.5|
|10||Vanguard FTSE Developed World ex UK||FTSE Developed ex UK||---||-1.9||58.2|
Source: FE Trustnet
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