Fund buyers back UK mid caps 

Fund buyers back UK mid caps 

Investors are backing UK mid caps this summer, with Richard Watts’ Old Mutual UK Mid-Cap fund entering the best-selling funds chart at The Share Centre.

The Old Mutual fund was a new entry into the top traded funds list for June, with investors confident in the managers’ ability to pick stocks that can grow in spite of economic conditions, The Share Centre suggested.

Sheridan Admans, investment research manager at The Share Centre, said: “Old Mutual UK Mid-Cap is a new entry in our top-traded funds, suggesting that investors not only see this as an attractive segment of the UK market, but also have faith in fund manager Richard Watts’ stock picking ability.

"While he does pay consideration to economic conditions, the interest rate cycle and industry trends when constructing his portfolio, he is predominantly a manager that relies on companies' fundamental data when seeking out growth businesses.

“Those companies have either the ability to grow earnings faster than the market average for an extended period, the scope to generate a positive earnings surprise or the potential to be re-priced relative to the market.”

Elsewhere, income remained at the top of investors’ agendas, with a strong showing from equity income funds. The group suggested this could be a reflection of inflation expectation and the potential for a pickup in volatility ahead.

Terry Smith’s Fundsmith Equity fund retains the top spot, with investors favouring his focus on “defensive, resilient companies with advantages that are difficult to replicate”.

Neil Woodford’s CF Woodford Equity Income fund takes second place for the month, and remains a perennial favourite on the fund platform.

“Elsewhere in the list, we see investors taking a global perspective, making specific regional and sector bets as highlighted by trades in Indian, European and Japanese funds,” said Mr Admans.

“We continue to see signs that investors are no longer buying into the Trump reflation trade that dominated Q4 2016 and early Q1 2017. The fact that investors do not seem to be significantly allocating to the US may be a reflection of stretched US equity valuations.”

Top traded funds in June 2017 from The Share Centre:

1. Fundsmith Equity

2. CF Woodford Equity Income

3. Jupiter India

4. Lindsell Train Global Equity

5. Woodford Income Focus

6. AXA Framlington Global Technology

7. Legg Mason Japan

8. Old Mutual UK Mid-Cap

9. Man GLG Continental European Growth

10. Jupiter Global Managed

*Data was analysed over 1/5/17 – 31/5/17

Source: The Share Centre