Four new entries in our top 10 list and a definite shift from active to passive investing.
What a difference a month makes. The huge macroeconomic shock that is the coronavirus pandemic has notably altered our monthly most-bought investment funds list, with eight of the top 10 funds now being passive products, up from six in February.
Since our last monthly update, the UK has been put under lockdown, and the FTSE 100 index has experienced its worst quarter since 1987.
While the most-bought funds list, compiled with data from our parent company interactive investor, still contains firm favourites Fundsmith Equity and Vanguard LifeStrategy 80% Equity in the top two spots, respectively, four new entries in the line-up are all index tracker funds in the Investment Association’s UK All Companies sector.
Dip-buyers appear to have come out in force and are attempting to secure bargains through low-cost passive products following the coronavirus market sell-off. Entering the list in sixth place is the Vanguard FTSE UK All Share Index, with the HSBC FTSE 100 index, Fidelity Index UK and Vanguard FTSE 100 Index taking the eighth, ninth and tenth spots, respectively.
In keeping with the passive trend, the Vanguard LifeStrategy 100% Equity option has risen three places in the table, as investors with a long-term perspective attempt to take advantage of cheap prices. Meanwhile, the Vanguard LifeStrategy 60% Equity fund – the only faller in the table - slips one place to the fourth spot, although US leviathan Vanguard can still boast an impressive total of six funds in the most-bought list.
The Vanguard US Equity tracker has experienced a surge in demand, jumping two places to fifth place. Last week, President Donald Trump agreed a $2 trillion stimulus package – the largest in US history – to safeguard the country’s economy from the virus.
Ever a favourite among investors, Lindsell Train Global Equity, with its strategy of buying quality companies for the long term, has climbed one spot to seventh place. Along with Fundsmith Equity, it is one of only two actively managed funds in our list.
The active funds that have exited the top 10 since February are Baillie Gifford American, previously in the fourth spot, and AXA Framlington Global Technology, previously ranked ninth.
Part of the appeal of passive funds is their low cost and simplicity. Investors who buy a passive fund opt to simply “buy the market” and their returns will mirror how the index performs, minus fees.
In contrast, with active funds, investors are buying on the hope of outperformance. While there are funds that have earned their stripes in delivering plenty of value to investors, the reality is that there are far more duds than gems. Investors need to have their wits about them and seek out the superior options. One useful starting point is Money Observer’s Rated Funds list, which highlights best-in-class active funds, as well as passive options.
|Rank||Fund||IA sector||Change since
| 1-year return
to April 1 (%)
|1||Fundsmith Equity||Global||no change||1.6||34.1|
|2||Vanguard LifeStrategy 80% Equity||Mixed Investment 40%-85% Shares||no change||-6.1||3.1|
|3||Vanguard LifeStrategy 100% Equity||Global||+3||-9||0.9|
|4||Vanguard LifeStrategy 60% Equity||Mixed Investment 40%-85% Shares||-1||-3.1||5.2|
|5||Vanguard US Equity Index||North America||+2||-4||12.4|
|6||Vanguard FTSE UK All Share Index||UK All Companies||New entry||-19.8||-14.1|
|7||Lindsell Train Global Equity||Global||+1||-3.6||39|
|8||HSBC FTSE 100 index C Acc||UK All Companies||New entry||-18.8||-13.5|
|9||Fidelity Index UK Fund P Acc||UK All Companies||New entry||-18.6||-13.2|
|10||Vanguard FTSE 100 Index Unit Trust A||UK All Companies||New entry||-19.8||-13.8|