Woodford lands Isa season top spot

The Share Centre, which provided analysis on the number of stocks and funds traded in Isas between 1 February and 25 March, found investor appetite continued to grow for the flagship equity fund during the so-called ‘Isa season’.

This is the period before the end of the tax-year, when banks usually offer their highest interest rates in order to attract customers, meaning investors often flock to make the most of their tax-free wrappers.

Launched in June 2014, the Woodford fund has continually outperformed its sector and prevailed across bestselling charts, landing the number one spot for the Share Centre’s top traded funds list for consecutive months.

Graham Spooner, investment research analyst at The Share Centre, said its popularity shows Isa investors are keen to benefit from the knowledge of “one of the industry’s most highly respected fund managers”.

“It’s no surprise the hunt for yield continues to push investors to look at these sorts of funds.” Ben Seager-Scott

Ben Seager-Scott, director of investment strategy at Tilney Bestinvest, said Neil Woodford’s reputation is built on an established track record of adding value for clients.

“As we’re in an low interest rate environment, it’s no surprise that the hunt for yield continues to push investors to look at these sorts of funds,” he said.

The Woodford Equity Income fund offers a portfolio comprised mainly of blue chip companies, as well as a number of young businesses.

Despite Woodford funds frequently topping the charts, his firm’s Patient Capital Trust reported a slide in its net asset value during its maiden year.

Also popular among Isa investors was Terry Smith’s Fundsmith Equity fund , coming second in The Share Centre data over the past two months, which Mr Spooner said was “unsurprising” because it favours defensive companies that are resilient to change.

Mr Seager-Scott pointed out, like Woodford’s Income fund, the Fundsmith investment was another fund with a big personality running it.

“Terry Smith is a very talented fund manager, who sticks to the tried-and-tested investment basics of finding good quality companies around the world with investment cases and then simply holding them for the long-term,” he said.

“The manager is upfront and honest in his views, the kind of straight-talking that appeals to many investors, and a simplicity that belies deep-rooted insight that the manager has honed through his earlier career path.”

Despite being the Share Centre’s top performing investment in 2015, the Legg Mason Japan Equity fund - which looks to benefit from Japan’s economic and structural changes - came third on the list.

Ben Willis, head of research at Whitechurch Financial Consultants, said this fund has bucked the trend, jumping 20 per cent while most Japanese equity funds were ploughing negative territory.

He argued that recent past performance has attracted investors.

With 80 per cent of the portfolio invested in long-term holdings, and the remaining 20 per cent exposed to more short-term tactical investments, Mr Spooner said it’s one that appeals to Isa investors.

The biotech industry has had a rough time recently, but despite this, the Axa Framlington Biotech fund has done well among Isa investors.

“Biotech has pulled back recently, so this may be luring investors back to the sector who may have missed the previous outperformance,” Mr Willis said.

Mr Seager-Scott said biotech is a niche area that can appeal to a lot of investors, adding there is a natural source of demand for biotechnology across developed economies, due to aging populations.

The Old Mutual UK Mid-Cap Fund rounded out the top five, with Mr Seager-Scott putting this success down to it being more tilted towards the domestic UK economy, rather than large caps, which tend to be more exposed to international markets.

Mr Willis added that the popularity of this fund was more surprising given the uncertainty of Brexit looming on the horizon.

katherine.denham@ft.com