Most-bought investments: March 2021

Passive funds make a comeback ahead of the new tax year.

• Baillie Gifford once again dominated, accounting for half of top 10 bestsellers lists for funds and investment trusts, respectively.

Passive funds made somewhat of a comeback on interactive investor’s fund bestsellers list in March, while UK equity investment trust City of London (LSE:CTY) returned to prominence following a four-month absence – but Baillie Gifford remained dominant.

All four of the passive funds on last month’s top 10 fund bestsellers list are from the Vanguard stable - with Vanguard LifeStrategy 80% Equity ranking highest, surging five positions (on from last month) into second, while the  60% variantrose from ninth to seventh place.

The two new entrants to the list, Vanguard LifeStrategy 100% Equity and Vanguard US Equity Indexrank in seventh and 10th positions, respectively.

However, active funds continued to prove popular among ii customers in March, with Baillie Gifford once again dominating, accounting for half of the top 10. Fundsmith Equity returned to the number one spot, knocking Baillie Gifford American off its perch. The fund fell to third place.

On the investment trust front, City of London re-entered our top 10 table of the most bought investment trusts among interactive investor customers following a four-months absence. It exited the list in November but, prior to that, the trust had been a regular member of the top 10, with its income consistency a key attraction.

Polar Capital Technology lost its place in our top 10 following City of London’s re-entry. The rest of the nine members of the top 10 kept their places in March, with Scottish Mortgage (LSE:SMT) rooted at the top of the table.

Four other Baillie Gifford-managed trusts are in the top 10: Edinburgh Worldwide (LSE:EWI) and Baillie Gifford US Growth (LSE:USA) occupy second and third place, while Pacific Horizon (LSE:PHI) is in fifth position. Further down the table in ninth place is Monks (LSE:MNKS). 

Teodor Dilov, Fund Analyst, interactive investor says: “The Vanguard LifeStrategy range has remained a favourite among our customers, despite the dominance of active funds on the top 10 fund bestsellers over the past year. These funds have developed a strong reputation, underpinned by a solid performance track record – even during the coronavirus crisis.

“As such, the popularity of Vanguard’s LifeStrategy funds last month can most likely be explained by lastminute investors seeking to make the most of the ISA allowance before the start of a new tax year on 6 April 2021.

“The Vanguard US Equity Index had not been seen in the top 10 most-bought funds’ list for about a year. It’s inclusion coincides with US president Joe Biden’s $3 trillion Covid recovery package, which, if implemented, could turbocharge the US market, following fears of rising interest rates and inflation which have dragged down the performance of the US market this year.

“The resurgence of City of London adds to a growing body of evidence that investor sentiment to the UK has started to pick up following a tumultuous period for the region owing to Brexit uncertainty and the pandemic. The Investment Association also reports that UK funds ended an eight-month streak of outflows in February. With the UK on the cusp of exiting lockdown, it will be interesting to see if the seemingly renewed appetite remains.”

On the best-selling equities, Richard Hunter, Head of Markets, interactive investor, says: “In a sign of the times, ongoing speculation surrounding cryptocurrencies has continued, with Argo Blockchain (LSE:ARB) still in the top 10.

“The rotation between the previously firing growth stocks to value stocks, typically more cyclical and mature businesses, in the wider market was mirrored in the list as a whole.

“As such, a major theme was travel and, in particular, airline and airline-related stocks, in the form of International Consolidated Airlines (LSE:IAG) and Rolls-Royce (LSE:RR.). Other demand-led shares in the event of a recovery saw a number of oil stocks in the list, with the ever-present Lloyds Banking Group (LSE:LLOY) also falling into that category, as investors tried to get ahead of a potential return to some kind of normality later in the year.

“The weakness of Tesla (NASDAQ:TSLA) stock was also enough of a reason to tempt bargain hunters, with the stock fifth in the list.”

Top 10 most -bought investments on interactive investor in March 2021