Top 10 most-popular investment funds: September 2022
3rd October 2022 11:32
by Sam Benstead from interactive investor
Investors retreat to passive funds as stock and bond markets plunge in September.
September was a tumultuous month for stock, bond and currency markets. American shares, as measured by the dollar value of the S&P 500, fell nearly 10%, and the FTSE 100 dropped about 6%.
Meanwhile, the pound fell 3.5% against the dollar, after being down as much as 7% at one point, and UK government bonds sold off with yields for the 10-year gilt now at 4%.
Amidst the negative sentiment, interactive investor customers turned to passive funds. Of the most-bought funds in September, nine out of 10 were index strategies compared with seven out of 10 in August.
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The only active fund on the list – retaining its top spot – was Fundsmith Equity, managed by star manager Terry Smith.
The giant fund has been a relatively strong performer this year given its bias to expensive “growth” shares that have been under pressure due to rising interest rates. It has returned -16% versus a 12.5% drop for the average global fund.
The active funds that dropped off the most-bought list were Baillie Gifford American, Fidelity Global Technology and FTF ClearBridge Global Infrastructure Income.
Expensive shares, which Baillie Gifford American and Fidelity Global Technology own, have been under pressure this year and took another turn downwards in September. The technology-heavy Nasdaq Composite index fell 10% for the month.
ClearBridge Global Infrastructure Income owns listed stocks involved in key infrastructure areas, including utilities, airports and toll roads.
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- The funds, ETFs and trusts ii customers buy every month
Entering the most-bought list in September was Vanguard FTSE Developed World Ex UK Equity Index, HSBC American Index, and Fidelity Index World.
Index investors have performed relatively well this year compared with active fund investors. The MSCI All-Country World index has lost 10% this year (in sterling terms) compared with a 12.5% drop for the typical active global fund. In the US, the S&P 500 is down 8%, similar to the average return from North America funds.
Vanguard FTSE Global All Cap Index rose two places up the most bought list, moving from seventh to fifth place, and L&G Global Technology Index rose three places to seventh. Vanguard LifeStrategy 60% Equity fell one place to sixth.
The four most-bought funds stayed the same month over month, with Fundsmith Equity followed by three Vanguard funds: Vanguard LifeStrategy 80% , US Equity Index and LifeStrategy 100% Equity.
| Rank | Fund | Ranking change since previous month | One-year return to 1 October (%) | 3-year return to 1 October (%) |
|---|---|---|---|---|
| 1 | Fundsmith Equity | No change | -11.1 | 20.7 |
| 2 | Vanguard LifeStrategy 80% Equity | No change | -7.5 | 10.3 |
| 3 | Vanguard US Equity Index | No change | -1.3 | 35.9 |
| 4 | Vanguard LifeStrategy 100% Equity | No change | -4.5 | 17.8 |
| 5 | Vanguard FTSE Global All Cap Index | Up two | -4.6 | 22.5 |
| 6 | Vanguard LifeStrategy 60% Equity | Down one | -10.3 | 3 |
| 7 | L&G Global Technology Index | Up three | -13.8 | 56.7 |
| 8 | Vanguard FTSE Developed World Ex UK Equity Index | New entry | -0.5 | 27 |
| 9 | HSBC American Index | New entry | 2.5 | 42.2 |
| 10 | Fidelity Index World | New entry | -2 | 29.2 |
Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of September. Performance data from FE Analytics.
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