A ‘surprising’ newcomer enters the list, as an investing ‘trend’ continues.
As the world confronts the prospect of a severe recession, where are investors choosing to put their money and which fund sectors do they believe will prosper post-pandemic?
Data from interactive investor, Money Observer’s parent company, reveals the appetite for technology and healthcare shows no signs of abating and investors’ apparent migration from passive to active funds continued in May, with the number of passive funds in the top 10 list falling from five to four. In March, eight of the top 10 funds were passive. The flight to funds in Vanguard’s low-cost LifeStrategy range, waned in May with Vanguard’s LifeStrategy 60% Equity, down three places to seventh, and Vanguard’s LifeStrategy 100% Equity, down four places to 10th.
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The most-bought funds list suggests that investors are putting their faith and money in the hands of investment professionals in such uncertain times. The actively managed Baillie Gifford American fund has continued its march up the table and now claims the second spot, while Vanguard’s LifeStrategy 80% Equity fund, which had held second place for six months straight, slips down to third. Among Baillie Gifford American’s top holdings are ‘lockdown champions’, such as the Canadian e-commerce company and Amazon challenger Shopify, Mastercard, and Zoom Video Communications.
Edinburgh-based Baillie Gifford now has three of its investment funds in the most-bought list, including Baillie Gifford Global Discovery, which has risen six places to the fourth slot since last month. The fund offers investors exposure to healthcare (42.9%) and tech (20.2%), with a geographical breakdown weighted towards the US (67%).
Baillie Gifford is also behind the list’s only newcomer in May: Baillie Gifford Positive Change, which has entered the table in ninth place. The global fund’s objectives are to invest in “products or behaviour [that] make a positive impact on society and/or the environment in the investment manager’s opinion”. Investments are made in businesses “addressing critical challenges in areas such as, but not limited to; education, social inclusion, healthcare and the environment”. The largest exposure is to the healthcare sector (35%), while its top 10 holdings include Tesla, Alphabet, and Taiwan Semiconductor Manufacturing Company.
While the resilience of tech and healthcare stocks are currently appealing to investors, many also have a desire to invest in a way that has a positive influence on the environment, which may also be a factor behind Baillie Gifford Positive Change entering the top 10.
Months of home-working by millions around the globe has confirmed the dominance of tech in our lives. However, as lockdown restrictions ease, and employers mull allowing more staff to work from home on a regular basis, the tech that makes it possible is likely to attract more investment. Tech funds such as Polar Capital Global Technology jumped three places to the sixth spot, while L&G Global Technology Index has climbed two places to fifth. Its top 10 holdings include Microsoft, Apple, and Facebook, with an 80% exposure to the US.
The biggest faller in the table was Lindsell Train Global Equity, which is down five places to number eight. The fund, which is overseen by star fund manager Nick Train, has consumer defensive stocks Unilever, Diageo, and Heineken, among its top 10 holdings.
Seemingly, nothing can dislodge the grip of Terry Smith’s Fundsmith Equity from the top of the table – it is the only fund to retain its place from last month.
|Rank||Fund||IA sector||Ranking change since
to 2 June
to 2 June
|1||Fundsmith Equity||Global||No change||12.90%||46.20%|
|2||Baillie Gifford American||North America||+3||50.80%||120.10%|
|3||Vanguard LifeStrategy 80% Equity||Mixed Investment 40%-85% Shares||-1||4.40%||14%|
|4||Baillie Gifford Global Discovery||Global||+6||33.90%||89.60%|
|5||L&G Global Technology Index||Technology & Telecommunications||+2||37.60%||77.10%|
|6||Polar Capital Global Technology||Technology & Telecommunications||+3||36.20%||90.50%|
|7||Vanguard LifeStrategy 60% Equity||Mixed Investment 40%-85% Shares||-3||5.30%||13.90%|
|8||Lindsell Train Global Equity||Global||-5||2.50%||47.10%|
|9||Baillie Gifford Positive Change||Global||New entry||50.10%||101.20%|
|10||Vanguard LifeStrategy 100% Equity||Global||-4||3.40%||13.90%|