What funds have investors been buying this year?

Technology continued to rule the roost in the first half of 2024, fuelled by optimism over the rapid take-up of artificial intelligence (AI). Valuation concerns and doubts about the sustainability of strong growth rates, for example, at Tesla, were ultimately brushed aside. Nvidia – the leading supplier of advanced AI chips to data centres – briefly surpassed Microsoft to become the world’s largest listed company.

Expectations of lower interest rates also underpinned shares, despite a slowing in the pace of inflation falls in the US. The European Central Bank reduced its key rate by a quarter point in June, despite expectations that inflation in the eurozone will remain above target until late next year.

Meanwhile, Japan’s Nikkei 225 Index finally exceeded its 1989 record high in February, driven by strong earnings reports and a buoyant tech sector. The FTSE 100 reached a new record high two months later, just prior to the surprise announcement of a UK general election. China’s stock market broke out of its longer term downtrend amid hopes for additional government support for the economy.

Funds weighted heavily towards US shares featured strongly in the first half of the year, largely as a consequence of the popularity of global tracker and technology funds. With UK interest rates still at a multi-year peak and only forecast to come down slowly, cash funds were also popular choices.

The top three funds for ISA and SIPP purchases were the same in the first half of the year. The Fidelity Index World Fund took the top slot as world stock markets continued to move ahead despite the uncertainties posed by general elections in several countries. This fund tracks the MSCI World Index on a net total return basis with returns automatically converted back into sterling.

The Fidelity Cash Fund, one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024, took second place. The Fund’s SONIA interest rate benchmark remained steady at 5.2% throughout the period, more than double the UK’s inflation rate in April and May¹. SONIA is the rate that banks pay to borrow sterling overnight from other financial institutions. The Fund currently has a distribution yield of 5.1% based on the interest expected to be paid over the next 12 months. Please note, this yield is not guaranteed.  

The Legal & General Global Technology Index Trust was in third place. This fund tracks the FTSE World Technology Index, so also enjoyed a very positive first half. Microsoft (16.1% of the trust at the end of May) overtook Apple as the fund’s largest holding in January. The portfolio currently contains 252 holdings, the ten largest of which make up around 70% of the portfolio².

For ISA purchases, the Fidelity Index US Fund came next. It was also the sixth most bought fund for SIPPs. This fund tracks the S&P 500 Index on a net total return basis – so inclusive of dividends. Microsoft, Apple and Nvidia are the largest holdings.

In fifth place for ISAs and fourth for SIPPs was the Fidelity Global Technology Fund. Unlike the L&G fund described above, this is an actively managed equity fund. Thus it has comparatively modest weightings in the market’s largest stocks and more in medium sized tech businesses. Taiwan Semiconductor – Nvidia’s main chip supplier – became the top holding in April.

The Royal London Short Term Money Market Fund was the fifth best selling fund for SIPPs. As for the Fidelity Cash Fund, the aim is to outperform the Bank of England’s SONIA rate. At the end of June, around 87% of the fund was invested in cash and cash equivalents, with the remainder in Treasury bills, short-dated gilts and covered bonds. The fund’s yield to maturity was 5.29%³. Please note this yield is not guaranteed.

SIPP investors propelled the Legal & General Cash Trust into seventh. Unlike the other two best selling money markets funds on these lists, this fund is benchmarked to its peers – the funds that make up the Short Term Money Market Sector. The fund currently has a distribution yield of 5.1%⁴. Please note this yield is not guaranteed.

The Jupiter India Fund was the six most bought fund for ISAs and tenth most popular for SIPPs. This fund has a highly selective investment approach, which has served it well over the longer term. Current large holdings include the tobacco manufacturer Godfrey Phillips India, Bharat Petroleum and State Bank of India.

The Indian stock market retreated sharply at the beginning of June as investors digested news that the ruling BJP had lost its parliamentary majority at India’s general election. However, shares quickly regained the lost ground and added more besides, as foreign buyers returned and the focus switched back to India’s excellent growth prospects. In April, the IMF upgraded its 2024 economic growth forecast for India to 6.8% from 6.5%⁵.  

The Legal & General UK Index Trust, in seventh place for ISAs, was the best selling ISA fund in June. This fund 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.

The Fidelity Global Dividend Fund – the second of Tom Stevenson’s fund picks for 2024 to feature here – was in eighth and ninth respectively for ISA and SIPP purchases. 

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. Market sectors with robust characteristics such as consumer staples and pharmaceuticals retain strong representations alongside substantial exposures to industrials and financial services companies. Europe accounts for the fund’s largest exposure at present, with the US close behind.

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

Another of Tom’s picks – the Legal & General Global Equity Index Fund – took ninth place for ISAs and eighth for SIPPs. This fund tracks the FTSE World Index.

Completing the table for ISAs was the Fundsmith Equity Fund. In April, the fund added a position in Texas Instruments. New holdings are a relatively rare occurrence for this fund, which has a strong tendency to maintain its positions over the longer term. 

Consumer staples and healthcare companies are the fund’s largest weightings, together accounting for around 52% of the portfolio. Technology makes up only around 13%, with Microsoft and Meta the only “Magnificent Seven” stocks to feature among the fund’s top-10 holdings as of the end of June.

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 UK index Trust
8. Fidelity Global Dividend Fund
9. Legal & General Global Equity Index Fund
10. Fundsmith Equity Fund

Top 10 best-selling SIPP 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 Global Technology Fund
5. Royal London Short Term Money Market Fund
6. Fidelity Index US Fund
7. Legal & General Cash Trust
8. Legal & General Global Equity Index Fund
9. Fidelity Global Dividend Fund
10. Jupiter India Fund

Source: Fidelity International. Gross ISA and SIPP sales from 1.1.24 to 30.6.24 for Personal Investors only.

Sources

¹ ONS 19.06.24
² Legal & General, 31.05.24
³ Royal London Asset Management, 30.06.24
⁴ Legal & General, 31.05.24
⁵ IMF, 16.04.24

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.