India-focused funds and investment trusts were some of the most popular for ISA and pension investors for two of UK's largest investment platforms last month, while elsewhere old trends remained firmly in place.
Jupiter India was January's best-selling fund across all ISA wrappers, SIPPs and drawdown investors at Hargreaves Lansdown, not surprising in light of the country's stock market performance in the past year and with India's stock market hitting an all-time high early in the month (and extending it further in February).
Of the other most-bought funds in the month, four are income funds, three growth or technology funds, with the others a money-market fund and a bond fund (see tables below).
At the rival Interactive Investor (ii) platform, owned by Abrdn, Jupiter India was the fourth-most popular fund, with top place going to a passive fund, the L&G Global Technology Index, followed by Vanguard Lifestrategy 80% Equity, which is a portfolio of exchange-traded funds (ETFs).
Terry Smith's Fundsmith Equity was in third place on the ii platform, ahead of the India fund, a money market fund and more ETFs.
Investment trusts
The most popular investment trusts included another fund focused on India, India Capital Growth Fund Ltd (LSE:IGC), in 10th place with ii and in third with HL.
Top of the ii list, as it was in most months last year, was the Scottish Mortgage Investment Trust PLC (LSE:SMT), followed by JP Morgan Global Growth.
Scot Mort was second with AJ Bell, but not in the top 10 among SIPP owners on HL.
Growth equity funds and bond funds also feature in the top 10 funds for ISA investors as can be seen in the tables at the end of the article.
Emma Wall, head of investment analysis and research at Hargreaves Lansdown, said the popularity of Indian funds reflected 20% growth over the past year, with the attraction "amplified" for investors by the fact that China's stock market has fallen 17% over the same period.
"As well as Jupiter India, HL investors have been buying Kotak India Growth," she said.
On investors' use of fixed income funds, she said investors were recognising the "once in a multi-decade opportunity in the bond market".
With speculation mounting in recent weeks about the timing of interest rates from the Federal Reserve and the Bank of England, Wall said that "while rates are on hold it doesn’t mean you shouldn’t be buying into fixed income. You get a great yield now, and a good bond fund will be able to take advantage of fluctuations in the underlying market while the headline rate holds – and offer investors growth as yields fall."
Kyle Caldwell, ii's collectives expert, said the choices of tech-centric investments took the spotlight, with L&G Global Technology Index topping the most-popular fund list, and Allianz Technology a new entrant to the top 10 most-popular investment trust table joining rival Polar Capital Technology.
“L&G Global Technology Index holds five of the so-called Magnificent Seven stocks in its top 10 positions, with the two exceptions being Amazon and Tesla," he noted.
"Investors buying this passive strategy need to be comfortable with its top two holdings having huge individual weightings of 17%, which are Apple and Microsoft."
Both Allianz Technology and Polar Capital own six of the seven American tech giants in their top 10 holdings, aside from Tesla. As well as artificial intelligence (AI), another key sector for the duo is cybersecurity.
Also, Scottish Mortgage, the most-popular investment trust with ii customers in January, also provides exposure to the AI theme. The innovation-focused portfolio recently bought back shares in Meta (the owner of Facebook), and also owns Nvidia.
Caldwell adds: “Given how prevalent US technology stocks are in global and US funds, both active and passive, it is worth investors having a quick look under the bonnet to assess whether they already have a lot of exposure to the AI theme. While the theme looks here to stay, share prices don’t move up in a straight line, so there will be the inevitable pullbacks in share prices along the way.
“As ever, while it sounds boring, the key to a smoother stock market ride is to have plenty of diversification, which is achieved by having a mixture of asset classes, countries and investment styles. If a portfolio becomes over-reliant on one type of investment or theme it can work well for a period but can also quickly turn sour.”
Top Funds in HL ISAs, January 2024 (net buys)
- Jupiter India
- Fidelity Global Dividend
- Royal London Short Term Money Market
- Artemis Global Income
- Artemis Corporate Bond
- WS Blue Whale Growth
- Artemis High Income
- Artemis Income
- Fidelity Global Technology
- Liontrust Global Technology
Top funds in HL JISAs, January 2024 (net buys)
- Jupiter India
- Fidelity Global Dividend
- Rathbone Global Opportunities
- Fidelity Global Technology
- Artemis Income
Top funds in HL LISAs, January 2024 (net buys)
- Jupiter India
- Royal London Short Term Money Market
- Fidelity Global Dividend
- Rathbone Global Opportunities
- Fidelity Cash
Top Investment Trusts in HL SIPPs, January 2024 (net buys)
- JPMorgan Global Growth & Income PLC
- Pershing Square Holdings (LSE:PSH) Ltd
- India Capital Growth Fund Ltd (LSE:IGC)
- Ashoka India Equity Inv Trust PLC
- Allianz Technology Trust PLC (LSE:ATT)
- Polar Capital Technology Trust PLC (LSE:PCT)
- Alliance Trust PLC (LSE:ATST)
- City of London Investment Trust (LSE:CTY)
- HICL Infrastructure PLC
- Greencoat UK Wind PLC (LSE:UKW)
Most bought investment trusts on interactive investor, January 2024
- Scottish Mortgage Investment Trust PLC (LSE:SMT)
- JP Morgan Global Growth
- City of London Investment Trust (LSE:CTY)
- Alliance Trust PLC (LSE:ATST)
- Pershing Square Holdings (LSE:PSH)
- Greencoat UK Wind PLC (LSE:UKW)
- Polar Capital Technology Trust PLC (LSE:PCT)
- Allianz Technology Trust PLC (LSE:ATT)
- Blackrock World Mining Trust (LSE:BRWM)
- India Capital Growth Fund Ltd (LSE:IGC)
Most bought investment trusts on AJ Bell for the past month
- JPMorgan Global Growth & Income
- Scottish Mortgage Investment Trust PLC (LSE:SMT)
- F&C Investment Trust PLC (LSE:FCIT)
- Law Debenture Corporation (LSE:LWDB)
- Personal Assets Trust (LSE:PNL)
- 3i Group PLC (LSE:III)
- Gore Street Energy Storage Fund PLC (LSE:GSF)
- AVI Global Trust
- TR Property Investment Trust plc
- Fidelity Special Values