What funds did investors buy in April?

After a highly positive first quarter, stock markets came back down to earth a little in April. The cause was principally a partial reassessment of the interest rate outlook. While growth softened in the first quarter, inflation was slightly stronger than expected, casting doubt on prior forecasts that US rates might be cut three times before the year is out.

Markets also started to reappraise their assumptions regarding artificial intelligence (AI), after reports of soaring capital spending at Google, Meta and Microsoft. AI may have very considerable longer term benefits, but these have to be paid for upfront, with no guarantees of success.

Meanwhile, some value areas of markets – including financials and miners – showed further signs of strength. This played into the hands of the FTSE 100, which rose above the 8,100 mark, narrowly beating its previous best in February 2023.  

Fidelity’s Personal Investors continued to bias towards big tech in April, through both indexed and actively managed funds. Cash funds stayed highly popular too, although a proportion of this may have been down to investors parking monies around the start of a new tax year.

Once again, the Fidelity Index World Fund was the most bought fund for both ISAs and SIPPs. Tracking the MSCI World Index converted back into sterling, this fund offers investors an uncomplicated and cost-effective route to geographic diversification. The fund’s ongoing charge is 0.12%.

The Fidelity Cash Fund took second place in both categories. The fund’s SONIA benchmark interest rate remained at 5.2% in April, easily beating inflation¹. SONIA reflects the rate that banks pay to borrow sterling overnight from other financial institutions and it’s close to the current Bank Rate of 5.25%.

As such, this fund continues to offer an attractive combination of safety and a real-terms income. It should continue to do so even if, as markets expect, the Bank of England reduces its Bank Rate once or twice in the second half of the year. The Fidelity Cash Fund is one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024.

Two more money markets funds – the Royal London Short Term Money Market Fund and Legal & General Cash Trust – took the next two places for SIPP. The Royal London fund has been a highly popular choice over the past year, often vying with the Fidelity Cash Fund for top spot among the money markets contenders.

The Legal & General Global Technology Index Trust had another good month, taking third place for ISA purchases and fifth for SIPPs. This fund tracks the FTSE World Technology Index, so has around 85% invested in the US. The AI boom saw Microsoft (currently 17.0% of the portfolio) overtake Apple (13.5%) as the fund’s largest holding in January. However, both companies have seen their weightings fall as a percentage of the Index over the past two months, helping a little to alleviate concentration risks. On the other hand, Nvidia, in third, has seen its weighting increase to 11.7% compared with 8.6% in January².

In a similar vein, the Fidelity Global Technology Fund was the next most popular choice for ISAs while taking sixth place for SIPP purchases. This actively managed equity fund has comparatively modest weightings in the market’s largest stocks: Microsoft and Apple account for 5.2% and 3.6% of the fund’s assets respectively. Taiwan Semiconductor (5.2%) – the main producer of chips for Nvidia – is the second largest holding.

The Fidelity Index US Fund was the only single country tracker fund to feature on these lists, ranking fifth and seventh 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 sixth place for both ISAs and SIPPs. 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 group of blue-chip companies.

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. Europe accounts for the fund’s largest exposure at present, with the US close behind.

Another of Tom’s picks – the Legal & General Global Equity Index Fund – also fared well. It took seventh place for ISAs and tenth for SIPPs. This fund tracks the FTSE World Index.

There was a new entrant in eighth place for SIPPs – the Fidelity Multi Asset Allocator Growth Fund. As its name implies, this fund invests in a combination of shares and bonds. Shares currently account for 59% of the portfolio. This fund aims to increase in value over a period of five years or more and allocates at least 70% to index tracking funds.

In eighth place for ISAs was the Fundsmith Equity Fund. In April, the fund added a small position in Texas Instruments and is currently accumulating a holding in another company, the name of which is yet to be disclosed. 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 which now account for around 54% of the portfolio. Technology makes up only around 12% – about 1% up on March – although outsized gains from Microsoft and Meta – the Fund’s second and third largest holdings respectively – have contributed strongly to returns this year³.

Another long-time favourite – the Rathbone Global Opportunities Fund – was in ninth for both ISAs and SIPPs. This is another global stock picker seeking businesses that are growing fast and shaking up their industries. This 54 stock portfolio currently has Nvidia and Microsoft as its top holdings, with Costco in third and the Dutch chip lithography supplier ASML in fourth.

Technology accounts for around 16% of the current portfolio, but then so do industrials. The fund’s largest exposure (23%) is to consumer discretionary companies⁴.

Finally, the Jupiter India Fund, which aims to beat the MSCI India Index, took tenth place for ISA purchases. 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 multinational.

Going in to this month’s general election, at which Narendra Modi looks poised to continue in power for a rare third term, India’s economy appears to be in good shape. According to the IMF, India’s economy is anticipated to be a world leader this year and next, growing by around 6.5% both years⁵.

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

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

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

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

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

Sources

¹ Bank of England, 01.05.24
² LGIM, 31.03.24
³ Fundsmith, 30.04.24
⁴ Rathbones, 31.03.24
⁵ 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.