What funds did investors buy in September?

Stock markets emerged from what is often thought to be a difficult month for shares relatively unscathed. Following a modest reversal in early September, shares rose after America’s central bank cut interest rates for the first time in four years.

The S&P 500 and the Dow Jones Industrial Average advanced to new record highs in the second half of the month. Meanwhile, the Nasdaq recovered more of the ground it lost in August, amid hopes the Fed’s 0.5% rate cut will benefit growth companies. Gold and bitcoin shared in the spoils as the dollar weakened. The former rose to almost $2,700 per ounce in late September¹.

Asian markets proved volatile. Chinese shares roared after the introduction of measures to boost a flagging economy and stock market, including cuts to mortgage rates. In Tokyo, shares moved sharply in the other direction amid uncertainty about future economic policy under incoming Prime Minister Shigeru Ishiba.

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There were quite a few changes to the most bought funds at Fidelity Personal Investing in September. Funds investing in money markets and technology companies remained popular, but they were joined by new entrants investing in Europe and India. Meanwhile, multi-asset funds took two of the top-10 places for SIPPs.

The Fidelity Index World Fund was the most bought fund for both ISAs and SIPPs. This fund tracks the MSCI World Index on a net total return basis. Returns are automatically converted back into sterling, providing UK investors with a straightforward and cost-effective route to geographic diversification.

The Fidelity Cash Fund took second place in both categories, while the Royal London Short Term Money Market Fund was the fifth most bought fund for SIPPs and seventh most popular for ISAs. Slipping out of the top 10 for SIPPs last month was the Legal & General Cash Trust.

The Fidelity and Royal London funds are both benchmarked to the Bank of England’s SONIA interest rate, which reflects the rate that banks pay to borrow sterling overnight from other financial institutions. SONIA remained at 4.95% over the course of September,² still more than twice as high as inflation (2.2% in August)³.

New in September and in third place for ISA purchases was the Legal & General European Index Trust. This fund tracks the FTSE World Europe ex UK index on a net total return basis and benefits from having significant holdings in European success stories such as the Wegovy weight-loss drug maker Novo Nordisk, chip lithography specialist ASML and Nestlé⁴.

Europe’s stock markets continue to trade at a sizeable discount to world markets, despite the many world-leading companies that exist there. Based on the earnings European companies are expected to achieve over the next 12 months the discount amounts to about 25%⁵. For investors cautious about the valuations of US companies in particular, Europe might seem to provide an answer.

In third for SIPPs was the Fidelity Index US Fund. Like the Fidelity Index World Fund, this fund tracks its target index (the S&P 500 in this case) on a net total return basis.

The Fidelity Global Dividend Fund took both fourth places compared with seventh and eighth respectively in August. Managed by the experienced income investor Dan Roberts, this fund aims for a dividend based total return with capital preservation as its top priority.

Europe accounts for the fund’s largest exposure at present, with the US close behind. The fund has large weightings in financial services companies and industrials at present, alongside companies with notably defensive earnings in the consumer staples and pharmaceuticals sectors.

• Watch Dan Roberts, portfolio manager of the Fidelity Global Dividend Fund, share his case for global investing at our recent Wealth Investor Forum.

Two familiar, technology focused names remained among the most bought funds, although both slipped a few places down the rankings compared with the month before.

The Legal & General Global Technology Index Trust was in fifth place for ISAs and eighth for SIPPs. This fund tracks the FTSE World Technology Index and had 251 holdings at the end of August. The ten largest holdings – led by Apple, Microsoft and Nvidia – make up 70% of the portfolio⁶.

The Fidelity Global Technology Fund – in ninth for both ISAs and SIPPs compared with fourth in both categories in August – has the ability to take much reduced positions in the market’s biggest stocks or miss them out altogether.

Taiwan Semiconductor, the maker of high-end Nvidia AI chips, currently accounts for 6.2% of the portfolio. Microsoft and Apple– 6.1% and 4.5% of the portfolio – come next. Sweden’s Ericsson, Texas Instruments and the US business software provider Workday also feature among the top 10 holdings.

The Jupiter India Fund returned to the top-10 for ISA purchases in sixth place. This is an actively managed fund that aims to beat the MSCI India Index. Current large holdings include the tobacco manufacturer Godfrey Phillips India, Bharat Petroleum and Interglobe Aviation. Financials account for the largest sector weight, at 20% of the portfolio, followed by industrials (12%)⁷.

India’s stock market continued on a strong upward trend for most of September. A modest retreat towards the end of the month reflected a switch of focus to the investment prospects for China after a substantial government stimulus. Intensifying concerns about military actions in the Middle East also weighed on sentiment.

The Fidelity Multi Asset Allocator Growth Fund was in sixth place for SIPPs. As its name implies, this fund invests in a combination of shares and bonds. Shares currently account for around 60% of the portfolio. This fund aims to increase in value over a period of five years or more and allocates at least 70% to index tracking funds.

Next for SIPPs was another multi-asset portfolio – the Vanguard LifeStrategy 80% Equity Fund. This fund sits at the more aggressive end of Vanguard’s LifeStrategy family of funds. While it invests mostly in index tracking funds from the Vanguard stable, the manager has discretion over which funds are selected and how much is allocated to each.

Two index trackers rounded out the tables. For ISAs, it was the Legal & General UK Index Trust. This fund, which topped the ISA best sellers list in June, tracks the FTSE All-Share Index on a net total return basis and does so by holding positions in all, or substantially all of the shares in the Index.

Finally, the Legal & General Global Equity Index Fund was the tenth most popular choice for SIPPs. This fund aims to deliver growth and income by tracking the FTSE World Index.

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

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

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

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Fidelity Index US Fund
4. Fidelity Global Dividend Fund
5. Royal London Short Term Money Market Fund
6. Fidelity Multi Asset Allocator Growth Fund
7. Vanguard LifeStrategy 80% Equity Fund
8. Legal & General Global Technology Index Trust
9. Fidelity Global Technology Fund
10. Legal & General Global Equity Index Fund

Source: Fidelity International. Gross ISA and SIPP sales in September 2024 for Personal Investors only.

Sources

¹ Bloomberg, 07.10.24
² Bank of England, 30.09.24
³ ONS, 18.09.24
⁴ LGIM, 31.08.24
⁵ MSCI, 30.09.24
⁶ LGIM, 31.08.24
⁷ Jupiter Asset Management, 31.08.24

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.