Passive  

Platform clients favour index funds in August

Platform clients favour index funds in August

Vanguard index funds accounted for half of Interactive Investor’s top 10 bought funds in August, according to data released by the platform.

Of the five bestselling index funds listed in August, four were from Vanguard’s LifeStrategy range, while the fifth was the Vanguard US Equity Index fund.

Index funds took up half the open-ended fund buys on the direct to consumer platform in August, which was already the case in June and February this year.

Interactive Investor found that its customers also flocked to “industry stalwart” funds and investment trusts in the month, with the £19.6bn Fundsmith Equity fund, managed by Terry Smith, topping the most popular open-ended funds list.

Nick Train had two funds in the top 10, with his £9bn Lindsell Train Global Equity fund, which he co-manages with Michael Lindsell and James Bullock, and his £7.4bn Lindsell Train UK Equity fund in second and fifth positions respectively.

Scottish Mortgage, managed by James Anderson and Tom Slater and with total assets of £8.8bn, secured the number one spot on the bestselling investment trusts table in August.

According to Interactive Investor, it has maintained its record as the most bought investment trust on the platform each month apart from one since February 2014.

City of London Investment Trust was the second most-purchased during the month, followed by Allianz Technology in third place.

The platform also revealed that “discount opportunists” purchased the Woodford Patient Capital investment trust, helping it onto sixth position on the bestsellers table.

The trust, which is run by embattled fund manager Neil Woodford, is trading at a discount of around 42 per cent as at September 3, 2019.

David Bebb, chartered financial planner at Pannells Financial Planning, said: "Vanguard having such a dominant position in the list demonstrates that the benefit of low-cost index investing has filtered through to the UK self-investor.

"Investing costs are far more widely accessible now than in recent years - this will inevitably direct investors towards funds such as these. The list also shows that investors are still backing active funds with desirable track records."

Rebecca O’Keeffe, head of investment at Interactive Investor, said against an uncertain backdrop for global markets, investors were increasingly favouring passives, while also sticking with household names.

“The inclusion of the Investec Global Gold fund is somewhat reflective of a growing appetite for perceived ‘safe havens’ amid concerns over the global economy and fears of a recession,” she added.

But Mr Bebb said: "Questions must be asked as to what long-term position a fund like this would serve in an investor’s portfolio, as gold rarely outperforms equities in the long run and is often volatile over the short term."

FundsInvestment Trusts
Fundsmith EquityScottish Mortgage 
Lindsell Train Global EquityCity of London Investment Trust
Vanguard LifeStrategy 80% EquityAllianz Technology
Lindsell Train UK Equity Finsbury Growth & Income
Vanguard Lifestrategy 60% EquitySmithson
Vanguard US Equity IndexWoodford Patient Capital
Investec Global GoldMurray International 
AXA Framlington Global TechnologyMonks
Vanguard LifeStrategy 100% EquityF&C Investment Trust
Vanguard LifeStrategy 20% EquityPolar Capital Technology