Investors stuck with fund managers with reliable track records during the last Isa season as they looked to guard their cash against market turbulence, according to the Tilney Group.
Data from the wealth manager found investors had flocked to managers with strong long-term track records in the previous financial year, with investment veterans Terry Smith and Neil Woodford securing the top spots.
Income funds, which invest in companies that pay out regular dividends, also proved popular in the last tax year.
Jason Hollands, managing director at the Tilney Group, pointed to the “cacophony of noise” around the election of Donald Trump, the Brexit vote, and the fact that developed stock market indices had scaled to record highs.
During the tax year, bond funds were largely absent from the popular league table, while property funds also dropped off the radar following the string of fund suspensions in July last year.
Instead, the group saw investors using its online investment service favour experienced active equity fund managers across most sectors.
The US stock market is notoriously hard for active fund managers to beat Jason HollandsThe £10.3bn Fundsmith Equity proved the most popular vehicle, and Mr Hollands said his clients can’t get enough of "tell-it-like-it-is manager" Terry Smith, who focuses on buying shares in good companies, and then holding on to them.
The fund has a high weighting to consumer staples at 34 per cent, healthcare at 28 per cent, and technology at 23 per cent.
The Tilney Bestinvest Growth offering, which is designed for investors with a long investment time horizon and invests in the likes of JO Hambro UK Opportunities, Liontrust Special Situations, and Vanguard S&P 500 ETF, was the second most popular vehicle.
In third place was Neil Woodford’s flagship £9.7bn Equity Income fund.
Mr Hollands said: “While this fund does dabble in riskier small growth businesses, it primarily focuses on resilient companies that are less affected by the global economic cycle and are more in charge of their own destiny.”
The £9.7bn Stewart Investors Asia Pacific Leaders fund came fourth on the list after emerging markets posted strong returns over the last year, despite warnings that President Trump's populist rhetoric could extinguish the sector's recovery.
The fund, managed by David Gait, is focused on investing in large companies with sustainable cash flows.
It is heavily weighted towards India at 32 per cent, followed by Taiwan at 18 per cent, with negligible exposure to China due to concerns about the rapid growth of debt.
When it comes to the US, the Tilney boss said clients firmly favoured a low cost passive investment approach, which he said was understandable given the “abysmal” track record of active fund managers in this market.
The HSBC American Index fund, which tracks the S&P 500 index, has been the most popular choice for Bestinvest clients investing in the US.
Mr Hollands added: “The US stock market is notoriously hard for active fund managers to beat and this tracker has a very low ongoing charge of 0.08 per cent.”
katherine.denham@ft.com
