What funds have investors been buying this year?

A positive corporate results season underlining the growing importance of AI and data suggesting continued strength in the US economy helped markets drive further ahead in the first quarter. Nvidia ensured the AI bull kept running, with results showing quarterly revenues increasing to a record $22 billion in the final three months of 2023¹.

There were signs too of a hotly anticipated central bank pivot in favour of lower interest rates. The Federal Reserve persisted with its signalling of three rate cuts this year, despite slightly higher inflation in February. Switzerland set the ball rolling with an actual cut in late March.

Meanwhile, the long-awaited broadening out of the bull trend in stock markets to include some formerly unpopular areas finally began to play out. China’s stock market showed signs of breaking out of its longer term downtrend following modest signs of improvement in the Chinese economy and as the government acted to put a floor under share prices.

Japan’s Nikkei 225 Index finally beat its 1989 record high, driven by strong earnings reports and tech sector optimism. Closer to home, some depressed blue chip shares in London joined in the rally. In particular, banks rallied after reporting profit surges driven by higher interest rates.

A confident mood in markets was reflected in an increase in the popularity of index tracker funds. Meanwhile, technology funds and money markets funds maintained a firm grip on the tables.

The top two funds for ISA and SIPP purchases were identical. The Fidelity Index World Fund cemented its position at the top as world markets kept rising. This fund tracks the MSCI World Index converted back into sterling, so offers investors an uncomplicated and cost-effective route to geographic diversification.

The Fidelity Cash Fund took second place. While interest rates are anticipated to fall the second half of this year, they’re also expected to remain somewhat elevated over the medium term. Thus, money market funds should continue to offer an attractive combination of safety and income going forward. The Fidelity Cash Fund is one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024.

The Fidelity Global Technology Fund was the most popular actively managed equity fund over the quarter, ranking third for SIPP purchases and fifth for ISAs. While concentration risk has become more of an issue for indexed portfolios, this fund holds manageable positions. Microsoft (5.0%), Nvidia’s main chip supplier Taiwan Semiconductor (4.8%) and Apple (3.9%) are the three largest holdings.

The Legal & General Global Technology Index Trust, took third place for ISA purchases and was in sixth place for SIPPs. This fund tracks the FTSE World Technology Index. The AI boom saw Microsoft (currently 17.0% of the portfolio) overtake Apple (14.9%) as the fund’s largest holding in January. Nvidia, in third, saw its weighting increase to over 10% for the first time a month later².

The Fidelity Index US Fund posted a solid fourth place for ISA and SIPP purchases respectively. This fund tracks the S&P 500 Index on a net total return basis – so inclusive of dividends.

The Jupiter India Fund – in sixth for ISA purchases and tenth for SIPPs – was the highest placed new entry. Having risen relentlessly in 2023, India’s stock market appears to have entered a consolidation phase so far this year. Time will tell if this is only a market pause, which is possible given India’s standout growth potential. The IMF currently expects India’s economy to grow by around 6.5% both this year and next³.

Money markets funds were relatively more popular among SIPP investors. In addition to the Fidelity Cash Fund in second place, the Royal London Short Term Money Market Fund and Legal & General Cash Trust were ranked seventh and eighth respectively for SIPPs.

The second of Tom Stevenson’s fund picks for 2024 – the Legal & General Global Equity Index Fund – also fared well, taking seventh place for ISA purchases and fifth for SIPPs. This is another global tracker, this time with the FTSE World Index as its reference.

Another of Tom Stevenson’s fund picks for this year – the Fidelity Global Dividend Fund – was the eighth most bought fund for ISAs. This fund aims for a dividend based total return – from dividends themselves and the dividend growth its holdings can deliver. Capital preservation is the top priority.

Europe accounts for the fund’s largest exposure at present, with the US close behind. Top holdings include the German stock markets operator Deutsche Boerse, the US media and communications conglomerate Omicon and the French pharmaceuticals giant Sanofi.

The long-time favourite Fundsmith Equity Fund was in ninth for both ISAs and SIPPs. This fund continues to emphasise high quality global growth companies in the consumer staples and healthcare sectors, which currently account for around 53% of its portfolio. Technology makes up only around 12%, although strong gains from Microsoft and Meta – the Fund’s largest and third largest holdings respectively – have contributed strongly to returns so far this year⁴.

Finally, the Rathbone Global Opportunities Fund rounded out the top-10 for ISA purchases. This fund returned to these tables in February after a short absence and is another actively managed portfolio to have benefited from the recent tech resurgence.

Nvidia and Microsoft are the current top holdings here, with the Dutch supplier of chip lithography machines in fifth. Even so, technology accounts for only around 17% of the total portfolio, with financials, consumer discretionary companies and industrials having similar weightings⁵.

Top 10 best-selling ISA funds on Fidelity Personal Investing in 2024

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Legal & General Global Technology Index Trust
4. Fidelity Index US Fund
5. Fidelity Global Technology Fund
6. Jupiter India Fund
7. Legal & General Global Equity Index Fund
8. Fidelity Global Dividend Fund
9. Fundsmith Equity Fund
10. Rathbone Global Opportunities Fund

Top 10 best-selling SIPP funds on Fidelity Personal Investing in 2024

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Fidelity Global Technology Fund
4. Fidelity Index US Fund
5. Legal & General Global Equity Index
6. Legal & General Global Technology Index Trust
7. Royal London Short Term Money Market Fund
8. Legal & General Cash Trust
9. Fundsmith Equity Fund
10. Jupiter India Fund

Source: Fidelity International. Gross ISA and SIPP sales from 1.1.24 to 4.4.24 for Personal Investors only.

Sources

¹ Nvidia, 21.02.24
² LGIM, 29.02.24
³ IMF, 30.01.24
⁴ Fundsmith, 28.03.24
⁵ Rathbones, 29.02.24

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment.  If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.