Money Observer Rated Fund Fundsmith Equity once again took the top position in the most-bought funds on Money Observer's sister website Interactive Investor in December.
The fund is managed by highly regarded investor Terry Smith and has over half of its assets in US equities. Its holdings include Microsoft and PayPal.
About two years ago the Fundsmith Equity toppled LF Woodford Equity Income to become the most-bought fund in our list. While Smith’s fund has remained at the top ever since, Neil Woodford's eponymous open-ended fund has completely dropped out of our top 10 list in December.
Previously, Woodford’s fund remained one of our most-bought funds, due to the fund manager’s reputation. But a look at its performance reveals that it has underperformed its sector average on all time frames. It lost 6.2 per cent over 6 months, for instance, while the IA UK Equity Income sector gained 5.5 per cent.
Money Observer Rated Fund Lindsell Train Global Equity came second in the list. Jointly managed by Michael Lindsell and Nick Train, the fund returned 11 per cent over six months and 24.5 per cent over one year.
Passive tracker Vanguard LifeStrategy 80% Equity came third again this month – it focuses on North American equities, UK equities and European ex UK equities, as well as global bonds.
It was followed by Baillie Gifford Greater China, which went up one spot to become the fourth most-bought fund in December on the back of positive investor sentiment following the Communist Party’s national congress in October, where President Xi Jinping consolidated his power.
After facing fears of a hard landing, the Chinese economy has been more resilient than expected last year, and the fund continues to be popular in our most-bought funds list. However, its worth remembering that as China transforms its economy, it continues to face many challenges: from environmental pollution to a lack of social services for its growing urban population.
A new entrant took the fifth place in December: Henderson Global Technology. With 80 per cent of its holdings in the US, where most technological innovation comes from, the fund has holdings including Facebook, Microsoft, Alphabet and Apple, who have been the main drivers of US growth last year. It returned 32 per cent over one year, and 175.5 per cent over five years.
It was followed by another new entrant: Legg Mason IF Japan Equity. Managed by Tokyo-based Hideo Shiozumi, the fund has 26 per cent of its holdings in industrials, another 26 per cent are in health care and 20 per cent are in information technology. The fund returned 31.5 per cent over one year and an astonishing 324 per cent over five years.
The outlook for Japan has been improving throughout 2017 and looks set to continue into 2018. Valuations continue to look cheap compared to the developed markets of the US and UK.
Artemis Global Income was the seventh most-bought fund in December. It benefits from a broad global spread as one third of its holdings are in US equities, 13 per cent in Italian equities, 6 per cent in Norwegian equities, 5.5 per cent in Israeli equities and 5.5 per cent in Japanese equities.
The eighth place was taken by Vanguard LifeStrategy 60% Equity, the second passive fund in the list. The tracker returned 8.5 per cent over one year and 59.3 per cent over five years.
It was closely followed by Money Observer Rated Fund Marlborough UK Micro Cap Growth. This fund is run by Giles Hargreave, a highly experienced smaller companies specialist, and a considerable proportion of the portfolio is invested in companies of less than £150 million.
Keep up to date with all the latest personal finance news and investment tips by signing up to our newsletter. Email subscribers will also receive a free print copy of Money Observer magazine.