Top 10 most-bought investment funds: February 2025
Fundsmith Equity makes a comeback, as tech and passive strategies remain appealing to investors.
3rd March 2025 14:06
by Nina Kelly from interactive investor
Fundsmith Equity, Terry Smith’s flagship £23.5 billion fund, crept back into the top 10 in February in 10th place. The global equity growth vehicle last appeared in the top 10 most-bought funds’ list in September.
In Smith’s annual letter to shareholders in January, the fund manager said that five stocks, NVIDIA (NASDAQ:NVDA), Apple (NASDAQ:AAPL), Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT) and Amazon (NASDAQ:AMZN), provided 45% of the returns of the S&P 500 index in 2024, and Nvidia alone produced over 20% of the S&P 500 returns in 2024.
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Smith said: “Outperforming the market or even making a positive return is not something you should expect from our fund in every year or reporting period, and outperforming the market was more than usually challenging once again in 2024.
“Our fund owns some, but not all, of these stocks and it was difficult to perform even in line with the index unless you owned them at least in line with their index weighting.”
Even though Fundsmith Equity I Acc has underperformed over four years. However, since launch in late 2010, Smith is still way ahead of the benchmark, returning635% compared with 416% for the MSCI World.
Royal London Short Term Money Mkt Y Acc, the only other actively managed fund in the top 10, retained poll position in February. This cash proxy fund is low risk and as interest rates start to come down, investor interest in it could wane, but for now it is yielding 4.65%, according to the 31 January factsheet.
However, investors may be able to enjoy the inflation-beating yield for some time yet as sticky inflation could mean interest rates are kept on hold for a while. Sam Benstead, ii’s fixed income lead, quoted Deutsche Bank in his weekly Bond Watch column, with the bank suggesting that inflation may peak at “4.25% over the summer, before making its descent back to target in 2026”.
Money market funds allow investors to take some risk off the table, with markets currently sensitive to Trump announcements on trade tariffs, as well as ongoing geopolitical conflict.
Incidentally, the Royal London fund retained its place in the line-up of funds for 2025’s £10,000 income challenge. The money market fund is also a potentially low-risk place for retirees managing an income portfolio to store cash in, in case they need to call on it during lean periods.
Despite January’s DeekSeek AI shock, investors remain committed to the popular tech fund L&G Global Technology Index I Acc, with the tracker falling just one place to third in the rankings. AI stock Nvidia updated the market at the very end of February, delivering fourth-quarter results beating expectations.
Vanguard US Equity Index £ Acc, the ninth-most bought fund in the February top 10, offers exposure to 3,561 stocks, and counts the Magnificent Seven among its top 10 holdings, with a 30.6% weighting to technology.
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Other passive funds in the top 10 included several from the Vanguard multi-asset LifeStrategy range, including the 60% Equity, 80% Equity and 100% Equity options. The latter fund formed part of the “core” allocation in the hypothetical core and ISA satellite portfolio assembled by Benstead, who reviewed the 2024 portfolio’s performance, and discussed changes for this year here.
Two passive global trackers that regularly appear in the monthly top 10 most-bought funds’ list, Fidelity Index World P Acc (fourth place) and HSBC FTSE All-World Index C Acc (fifth place), were highlighted in an article about the cheapest ways to track global markets, with the latter fund offering emerging markets’ exposure as well. The funds’ ongoing charges figure (OCF) are 0.12% and 0.13% respectively.
The final fund in the ranking, Vanguard FTSE Glb All Cap Index £ Acc is in eighth place.
UBS S&P 500 Index fell out of the top 10 in February.
Top 10 most-popular investment funds in February 2025
Rank | Fund | Change on last month | One-year return (%) | Three-year return (%) |
1 | No change | 5.14% | 12.7% | |
2 | Up one | 12.4% | 26.1% | |
3 | Down one | 15.9% | 64.4% | |
4 | No change | 14.8% | 41.8% | |
5 | Up two | 13.7% | 37.5% | |
6 | Up two | 14.7% | 37% | |
7 | Up two | 10% | 16% | |
8 | Down one | 13.7% | 36.7% | |
9 | Down four | 16.8% | 46.3% | |
10 | New entry | 5% | 27.1% |
Source: interactive investor/FE FundInfo. Performance data to 3 March 2025. Note: the top 10 is based on the number of “buys” during the month of February.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.