What funds have investors been buying this year?

Positive corporate results and enthusiasm over the transformational potential of artificial intelligence (AI) were strong drivers of markets in the first five months of the year. Expectations of lower interest rates also underpinned sentiment, although the persistence of a tight labour market and resilient consumer in the US eventually caused investors to rein in their rate-cut expectations.

AI fervour saw shares in the chipmaker Nvidia soar over the first five months of 2024, placing it in close reach of Microsoft and Apple – the world’s largest listed companies. Quarterly results revealed the company expects to see revenue from its Blackwell next-generation chips later this year.

Meanwhile, the long-awaited broadening out of the bull trend in stock markets finally began to play out. China’s stock market broke out of its longer term downtrend amid signs of a strengthening growth in manufacturing and services. Japan’s Nikkei 225 Index finally exceeded its 1989 record high, driven by strong earnings reports and tech sector optimism.

Closer to home, the FTSE 100 reached new record highs in April, as depressed blue chip shares in London joined the global rally. The announcement of a UK general election wrong-footed stock markets in May, although UK shares generally showed resilience in the face of this additional uncertainty.

Funds at opposing ends of the risk scale featured prominently among the best sellers, as Fidelity’s personal investors bought technology funds and cash funds in significant numbers. Global funds also drew strong support.

The top two funds for ISA and SIPP purchases were the same. The Fidelity Index World Fund consolidated its position at the top as world markets continued to progress. This fund tracks the MSCI World Index on a net total return basis and has enjoyed a positive five months so far this year. Returns are automatically converted back into sterling, providing UK investors with a straightforward and cost-effective route to geographic diversification.

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 benchmark interest rate remained steady at 5.2% in May, more than double the UK’s inflation rate of 2.3% in April¹. SONIA reflects the rate that banks pay to borrow sterling overnight from other financial institutions and sits just below the current Bank Rate of 5.25%.

Technology funds took both third places – the Legal & General Global Technology Index Trust for ISAs and the Fidelity Global Technology Fund for SIPPs. The same funds in reverse order took fifth place for ISAs and sixth for SIPPs.

The Legal & General Fund tracks the FTSE World Technology Index and currently has 252 holdings. In January, the AI boom saw Microsoft (currently 17.0% of the portfolio) overtake Apple (now 14.2%) as the fund’s largest holding. Nvidia remains in third for now².

The Fidelity Global Technology Fund is an actively managed equity fund and has comparatively modest weightings in the market’s largest stocks: Microsoft and Apple account for around 5.1% and 4.3% of the fund’s assets respectively. Taiwan Semiconductor (5.2%) – Nvidia’s main chip supplier – became the top holding during April.

The Fidelity Index US Fund was the only single country tracker fund to feature on these lists, ranking fourth and fifth for ISAs and SIPPs respectively. This fund tracks the S&P 500 Index on a net total return basis – so inclusive of dividends. Naturally, Microsoft, Apple and Nvidia are its largest holdings.

The Fidelity Global Dividend Fund – the second of Tom Stevenson’s fund picks for 2024 – was in eighth place for ISA purchases. This fund is able to invest in some of the world’s strongest income payers, reducing reliance on the UK stock market for income.

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.

Two more money markets funds – the Royal London Short Term Money Market Fund and Legal & General Cash Trust – took mid-table positions for SIPPs.

The Jupiter India Fund was the seventh most bought fund for ISAs. 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 HCL Technologies, an IT consulting multinational³.

India’s 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 recovered all of the lost ground after allies pledged their support for Prime Minister Modi’s government. In April, the IMF upgraded its 2024 economic growth forecast for India to 6.8%, while maintaining its 6.5% growth estimate for 2025⁴.

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

Completing the tables were two long-time favourites notable for their idiosyncratic positioning. The Fundsmith Equity Fund was in ninth position for ISA purchases. In April, the fund added a small 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 remain the fund’s largest weightings, together accounting for around 53% 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 holdings⁵.

Rounding out the table for ISAs was the Rathbone Global Opportunities Fund. This is another global stock picker seeking businesses that are growing fast and shaking up their industries. The Fund currently holds 54 stocks and has Nvidia, Microsoft and Costco as its top holdings. Amphenol – a US supplier of electronic and fibre cables and connectors – advanced to fourth position in the portfolio in April.

Like the preceding fund, the Rathbone Global Opportunities Fund is not leaning particularly heavily on the technology sector (16.7% of the portfolio). Consumer discretionary companies at 22.6% account for the largest sector weight⁶.

• Watch James Thomson, portfolio manager of the Rathbone Global Opportunities Fund share his case for global investing at our recent Wealth Investor Forum.

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. Fidelity Global Dividend Fund
7. Jupiter India Fund
8. Legal & General Global Equity Index Fund
9. Fundsmith Equity Fund
10. Rathbone Global Opportunities Fund

Top 10 best-selling SIPP funds on Fidelity Personal Investing in 2024

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Fidelity Global Technology Fund
4. Royal London Short Term Money Market Fund
5. Fidelity Index US Fund
6. Legal & General Global Technology Index Trust
7. Legal & General Cash Trust
8. Legal & General Global Equity Index Fund
9. Fidelity Global Dividend Fund
10. Rathbone Global Opportunities Fund

Source: Fidelity International. Gross ISA and SIPP sales from 1.1.24 to 31.5.24 for Personal Investors only.

Sources

¹ Bank of England, 04.06.24 and ONS 22.05.24
² LGIM, 30.04.24
³ Jupiter Asset Management, 30.04.24
⁴ IMF, 16.04.24
⁵ Fundsmith, 30.04.24
⁶ Rathbones, 30.04.24

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.