What funds did investors buy in August?

WORLD stock markets fell back amid worries about interest rates and China’s slowing economy for much of August. Then a late rally took shares off their worst levels after better-than-expected results from leading companies – notably NVIDIA – and the advent of economic stimulus measures from the Chinese government.

Stock markets have broadly performed very well so far this year, fuelled primarily by hopes of lower US interest rates in 2024. Even so, market uncertainty has continued to take its toll on investor sentiment.

In August, Fidelity’s personal investors continued to favour money market funds. These funds took three of the top five places for both ISA and SIPP purchases, with the £1.2 billion Fidelity Cash Fund and the even larger £2.6 billion Legal & General Cash Trust being the top picks.

Following recent increases in central bank interest rates, money market funds now offer an appealing combination of safety and income. They make sense as a port in a market storm, or as a parking place while other investment decisions are being made (switching into other types of funds or shares is straightforward). 

Meanwhile, the Fidelity Index World Fund spent another month in prime position for both ISAs and SIPPs. This fund tracks the MSCI World Index converted back into sterling. It has an ongoing charge of just 0.12%, so offers an attractive way of diversifying away from an investment portfolio composed mainly of UK shares at minimal cost.

Technology retained its allure too, with the Fidelity Global Technology Fund and Legal & General Global Technology Index Trust once again taking mid-table places.

The former is a highly selective investor in the technology space, which targets growth companies with disruptive technologies; more cyclical businesses with stronger balance sheets; and special situations that are either undervalued or expected to benefit from a forthcoming catalyst.

The Legal & General Global Technology Index Trust draws on an entirely different method. 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 36% between them, with NVIDIA (7%) in a comparatively distant third place¹.

The Rathbone Global Opportunities Fund remained a draw for ISA investors². While NVIDIA and Microsoft were this fund’s two largest holdings at the end of July, the portfolio looks considerably more balanced than it was two years ago.  Indeed, at 15%, the portfolio’s technology exposure is now overshadowed by larger weightings in the consumer discretionary and industrials sectors.

The Fundsmith Equity Fund returned to the top of Fidelity’s best seller lists in April and has remained there ever since. It was the eighth most-bought fund for ISAs and ninth for SIPPs last month.

After an unusually disappointing 2022, shorter term returns have been on the up. The Fund’s big winners so far this year have included Microsoft – the portfolio’s largest holding – and Facebook’s owner Meta³.

Both shares have surged after better than expected results and amid optimism over their abilities of both companies to capitalise on advances in AI.

Novo Nordisk – the Wegovy weight-loss drug firm and now Europe’s most valuable listed company – is the Fund’s largest holding.

You can discover more investment ideas in Fidelity’s latest Investment Outlook.  

Top 10 best-selling ISA funds on Fidelity Personal Investing in August 2023

1. Fidelity Index World Fund
2. Legal & General Cash Trust
3. Fidelity Cash Fund
4. Fidelity Global Technology Fund
5. Royal London Short Term Money Market Fund
6. Rathbone Global Opportunities Fund
7. Fidelity Index US Fund
8. Fundsmith Equity Fund
9. JOHCM UK Opportunities Fund
10. Vanguard LifeStrategy 60% Equity Fund

Top 10 best-selling SIPP funds on Fidelity Personal Investing in August 2023

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

Source: Fidelity International. Gross ISA and SIPP sales in August 2023 for Personal Investors only.

Sources:

¹ LGIM, 31.07.23
² Rathbones, 31.07.23
³ Fundsmith, 28.04.23

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.