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.

The New Year saw a marked change in stock markets. Whereas the latter stages of 2023 were characterised by a race to the top, January was much more about a fresh tussle between the bulls and bears.  

Nervousness ahead of the quarterly corporate results season – particularly for tech companies – recession fears in Germany and concerns stemming from China’s highly indebted property sector weighed on sentiment.  

Even so, a narrative of falling interest rates in 2024 and optimism about the seemingly unstoppable take-up of AI eventually prevailed. The US stock market drove on to a succession of new highs and other world markets followed the lead in the second half of the month. 

In this environment, Fidelity’s personal investors continued to buy a diverse mix of index trackers and funds focused on cash and technology. The notable new entrant was the Jupiter India Fund.

The same three funds took the top slots for both ISA and SIPP purchases in January. As has so often been the case over the past year, the Fidelity Index World Fund was in pole position. Tracking the MSCI World Index converted back into sterling, this fund continues to offer UK investors an uncomplicated and cost-effective route to a geographically diversified investment portfolio.

The £1.4 billion Fidelity Cash Fund took second place. This fund aims to generate a return that matches or exceeds the Sterling Overnight Index Average, or “SONIA”. The SONIA rate is 5.2% at the time of writing, just ahead of inflation (4.0% in December)1. The Fidelity Cash Fund is one of Tom Stevenson’s four fund picks for 2024

The Fidelity Global Technology Fund was the most popular actively managed equity fund of the month. Active management means this fund has the flexibility to avoid the severe concentration risk suffered by indexed technology funds. This it does, with Microsoft (4.8%); Apple (4.3%); and Taiwan Semiconductor (3.9%) being the largest holdings at the end of December.

The Fidelity Index US Fund and Fidelity Index UK Fund remained popular choices in January, ranking fourth and fifth in the case of the former; seventh and ninth for the latter.  Between them, these track arguably the two most important stock markets to UK investors – the S&P 500 Index and FTSE All-Share Index. Both indices are tracked on a net total return basis – so inclusive of dividends.

Two more money market funds – the Royal London Short Term Money Market Fund and Legal & General Cash Trust – also featured mid-table. The Royal London fund, in particular, has been a firm favourite over the past year, often vying with the Fidelity Cash Fund for top spot among the cash contenders.

The Legal & General Global Technology Index Trust – in fifth for ISA investors and seventh for SIPPs – draws on an entirely different method to the Fidelity Global Technology Fund described above.

It passively tracks the FTSE World Technology Index, so currently has around 85% invested in the US.  Apple and Microsoft dominate the portfolio holdings accounting for around 34% between them. Both factors were strongly positive drivers of returns in 20232.

So to the new entrant – the Jupiter India Fund. Jupiter’s high conviction, active management approach would seem to be highly appropriate in a fast growing market such as India’s, where pricing anomalies might be expected to occur relatively frequently.

India’s stock market boomed last year while China languished, driven largely by a new generation of domestic investors putting their money to work. That may turn out to have been a savvy move. India’s economy appears to have returned to pre-Covid levels of activity, and is anticipated to grow by around 6.5% in both 2024 and 2025 according to the IMF earlier this week4.

Whereas India has long been associated with the provision of services – notably IT – it has been striding ahead in manufacturing too. That promises a more balanced economy going forward, better able to harness the potential of a well-educated, motivated and growing workforce. A bright spot beyond the US tech sector, certainly.

Another of Tom’s fund picks for 2024 – the Fidelity Global Dividend Fund – was in eighth place for ISA purchases. This fund aims for a dividend based total return – from dividends themselves and the dividend growth its holdings can deliver. Capital preservation is the number-one priority.

This fund has the flexibility to invest in some of the world’s strongest payers, reducing reliance on the UK stock market where dividend payouts have become increasingly concentrated among a select band of blue-chip companies.  

Bringing up the rear for ISA purchases (eighth for SIPPs) was the Legal & General Global Equity Index Fund. This is the third of Tom Stevenson’s fund picks for 2024 to feature this month.

For SIPPs, Vanguard made the grade again last month, this time with the Vanguard LifeStrategy 60% Equity Fund in tenth place. This fund most closely matches the classic 60/40 shares-bonds mix that pension funds and other long-term investors often aim at.

While this fund invests primarily in index tracking funds from the Vanguard stable, there is an active element in that the manager has discretion over which funds are selected and how much is apportioned to each.

For more investing ideas, check out the latest Investment Outlook.

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

  1. Fidelity Index World Fund 
  2. Fidelity Cash Fund 
  3. Fidelity Global Technology Fund 
  4. Fidelity Index US Fund 
  5. Legal & General Global Technology Index Trust 
  6. Jupiter India Fund 
  7. Fidelity Index UK Fund 
  8. Fidelity Global Dividend Fund 
  9. Legal & General Cash Trust 
  10. Legal & General Global Equity Index

Top 10 best-selling SIPP funds on Fidelity Personal Investing in January 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 Cash Trust 
  7. Legal & General Global Technology Index Trust 
  8. Legal & General Global Equity Index 
  9. Fidelity Index UK Fund 
  10. Vanguard LifeStrategy 60% Equity Fund


Source: Fidelity International. Gross ISA and SIPP sales in January 2024 for Personal Investors only.

Sources

1 Bank of England, 01.02.24, and ONS, 17.01.24
2 LGIM, 31.07.23
3 Jupiter
4 IMF, 30.01.24

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. 

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