What funds did investors buy in May?

MAY is often said to mark the beginning of a quieter time for stock markets, as investors start to eye up the busier sporting and social calendars that summer brings. Whether that holds true today is a matter for debate, but European markets certainly came off the boil in the latter stages of May and it was decidedly downhill for the FTSE 100 for most of the month.

This pattern was far from universal though. US shares continued to make good headway, despite fears that Washington could run out of money in the absence of a Congressional agreement to raise America’s debt ceiling. Falling inflation and further gains among leading technology stocks helped to cement another Wall Street rally. A debt ceiling bill was finally passed last night.     

Japan’s Nikkei 225 Index was the month’s surprise package. It surged to a new 33-year high on post-deflationary optimism. Japan’s economy now seems set for a period of relative stability based on positive growth and inflation and continued low interest rates as the Bank of Japan takes time to intensively review its monetary framework.

Mixed market signals were mirrored in the diverse choices made by Fidelity’s personal investors in May. The top-three funds bought for ISAs were the Fundsmith Equity Fund; Fidelity Index World Fund; and Fidelity Cash Fund. The same funds – in a different order – occupied the top-three places for SIPP purchases too.

The Fundsmith Equity Fund returned to the top of Fidelity’s best seller lists in April and remained there in May. Having suffered a disappointing period in 2022, shorter term returns have been on the up. Big winners so far this year include Microsoft – the Fund’s largest holding – and Facebook’s owner Meta¹.

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

By contrast, the Fidelity Index World Fund is something of a stalwart, having regularly been among the most bought funds for both ISAs and SIPPs throughout the past year. May was no different in this regard. This fund tracks the MSCI World Index converted back into sterling, so offers an attractive way of diversifying away from an investment portfolio composed mainly of UK shares at minimal cost.

Pure technology funds remained a draw, with the Fidelity Global Technology Fund in fifth place for both ISA and SIPP purchases. This fund is a highly selective investor in the technology space, aimed at investing in a combination of 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.

A newcomer – the Legal & General Global Technology Index Trust – highlighted an investing method that contrasts greatly from the strategy described above. This fund passively tracks the FTSE World Technology Index, so currently has around 82% invested in the US. All the big stocks get captured, with Apple and Microsoft way out at the top followed in a distant third place by Nvidia².

Moving on to an entirely different approach, the safety-first Fidelity Global Dividend Fund also remained a popular choice – in sixth and ninth places for ISA and SIPP purchases respectively.

This fund offers investors the chance to invest in a managed portfolio of some of the world’s strongest dividend payers, thereby reducing reliance on the UK stock market, where the largest dividends have become increasingly concentrated among a relatively small number of blue chips.

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

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

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

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

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

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

¹ Fundsmith, 28.04.23

² LGIM, 30.04.23

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.