Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

STOCK MARKETS continued in a positive vein in July, despite the prospect of further rises in short term interest rates. Falling inflation helped markets look forward to a reversal in the current interest rate trend. Meanwhile, resilient consumers continued to dampen recession fears and bolster hopes for Goldilocks economic conditions – “not too hot, not too cold” – both here and in the US. 

The corporate earnings season generally delivered better-than-expected results. It remains the case, however, that a strong rally in earnings multiples rather than earnings themselves have been driving markets. There were some high profile disappointments – for example, from Netflix and Tesla.  

That said, with around half of the S&P 500’s companies having reported so far, 80% have beaten expectations1. The optimistic tone in markets was, once again, reflected in the exchange traded funds (ETFs) Fidelity personal investors bought over the month. ETFs tracking world and US stock indices featured strongly.

The $2.1 billion Vanguard FTSE Developed World UCITS ETF was top of the tree in July. It provides investors with a broad markets exposure, while missing out on the stronger growth but higher risks that emerging markets such as China and India generally entail. The US accounted for 70% of the portfolio as at the end of June. The ongoing annual charge is 0.12%2

The best selling fund the previous two months – the Vanguard S&P 500 UCITS ETF – slipped a place in July. This fund tracks the world’s largest market for an ongoing annual charge of just 0.07% and also benefits from Vanguard’s illustrious experience in passive management. It features on Fidelity’s Select 50 list of favourite funds.  

July was an important month for investors in the third-placed Invesco EQQQ Nasdaq-100 UCITS ETF. The fund adjusted its holdings in line with a special rebalancing of the market-cap weighted Nasdaq 100 Index on 24 July.

The rebalance was designed to alleviate a concentration of risk arising from the stellar performances of the index’s largest stocks in 2023. Now only Apple exceeds 10% of the index and fund, with Microsoft knocking at the door at 9.4%. Amazon, in third place, now accounts for 5.2% of the index3.    

The Vanguard FTSE All-World UCITS ETF differs principally from July’s best selling fund in that it encompasses investments in emerging markets in Asia, Latin America and the Middle East. 

The iShares S&P 500 Information Technology Sector UCITS ETF rounded out July’s top-5. This is the most concentrated portfolio on July’s list, being a carve-out of the 65 stocks of the S&P 500 classified as information technology. The fund is run by BlackRock – another manager with a strong reputation in tracker funds.  

July was a broadly positive month for the fund’s top holdings. Apple, Microsoft and NVIDIA  (57% of the fund) all registered solid progress in advance of their second-quarter earnings reports4. Microsoft’s flat performance for the month as a whole was largely due to a retreat after the company’s Chief Financial Officer (CFO) warned AI spending will continue to rise each quarter over the next year. However, revenues and profits last quarter were still ahead of forecasts5

Top 5 best-selling exchange traded funds (ETFs) on Fidelity’s Personal Investing platform in July 2023 

  1. Vanguard FTSE Developed World UCITS ETF
  2. Vanguard S&P 500 UCITS ETF
  3. Invesco EQQQ Nasdaq 100 UCITS ETF
  4. Vanguard FTSE All-World UCITS ETF
  5. iShares S&P 500 Information Technology Sector UCITS ETF 

Source: Fidelity Brokerage, 1-31 July 2023 

Source:

1 FactSet, 28.07.23
2 Vanguard, 31.07.23
3 Invesco, 31.07.23
4 BlackRock, 31.07.23
5 Reuters, 26.07.23

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. There is no guarantee that the investment objective of any Index Tracking Sub-Fund will be achieved. The performance of the sub-fund may not match the performance of the index it tracks due to factors including, but not limited to, the investment strategy used, fees and expenses and taxes.  Overseas investments will be affected by movements in currency exchange rates. Select 50 is not a personal recommendation to buy or sell a fund. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. 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.

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