What funds did investors buy in July?

World stock markets entered a more volatile phase in July, as investors were compelled to address a number of uncertainties including the outlook for the US economy after an extended period of high interest rates and rising tensions in the Middle East. Japan’s stock market eased back after the Bank of Japan raised interest rates for the second time this year, to 0.25%.

Growing doubts about the ability of AI to generate a profits boost for users commensurate with their investments dampened enthusiasm in the technology sector. Quarterly results from six of America’s Magnificent Seven tech companies were mixed. While Alphabet, Apple and Meta surprised to the upside in some respects, the opposite was true for Amazon, Microsoft and Tesla. Contrastingly, US smaller companies benefitted from a partial rotation away from the technology mega-caps.

The UK stock market also proved to be a winner amid the global uncertainty. Shares rose after the general election yielded a large majority for the Labour Party. This was seen as positive for stability. A first cut in UK interest rates at the end of the month proved less advantageous. Members of the Bank of England’s MPC only voted for a cut by the narrowest of margins and clearer guidance as to when further rate reductions might arrive was not forthcoming.

Funds at opposing ends of the risk scale continued to dominate the sales tables in July, with money market funds and funds invested in US technology shares accounting for a substantial proportion of investor purchases. In addition, UK funds proved popular, particularly with SIPP investors.

The Fidelity Cash Fund was in pole position for ISAs and the third most bought fund for SIPPs. The Fund’s SONIA benchmark interest rate remained steady at 5.2% in July, although this rate has now slipped to 4.95% after the Bank of England cut its Bank Rate by a quarter point to 5.0% on 2 August¹. SONIA reflects the rate that banks pay to borrow sterling overnight from other financial institutions.

The Fidelity Index World Fund was the most bought fund for SIPPs and was in second place for ISAs. This fund tracks the MSCI World Index, also on a net total return basis. Returns are automatically converted back into sterling, providing UK investors with a straightforward and cost-effective route to geographic diversification. The Fund’s ongoing charge is 0.12%.

The Legal & General Global Technology Index Trust took third place for ISAs and second place for SIPPs, even in an increasingly volatile environment for mega-cap technology shares. This fund tracks the FTSE World Technology Index and had 251 separate holdings as of the end of June. The ten largest holdings – led by Microsoft, Apple and Nvidia – make up around 70% of the portfolio².

The Fidelity Index US Fund was the most popular single country fund to feature on these lists, ranking in fourth for ISAs and fifth for SIPPs. Like the Fidelity Index World Fund, this fund tracks its target index (the S&P 500 in this case) on a net total return basis.

In fifth place, the Legal & General Cash Trust was the second of three money markets funds to make the top-10 for ISA purchases in July. Unlike its close rivals, this fund is benchmarked to its peers – the funds that make up the Short Term Money Market Sector. Meanwhile, the Royal London Short Term Money Market Fund was the sixth most bought fund for ISAs.

The Fidelity Special Situations Fund, in sixth place for SIPPs, was a new entrant. This is a contrarian, value-biased fund that searches out underappreciated companies mostly in the UK. As such, it offers an exposure to companies often not covered by other popular UK funds.

This fund has a broad-based portfolio comprising 110 holdings. Notable too is its 22% exposure to financials – principally banks and life insurers. Current large holdings include Imperial Brands, the Irish sales and marketing group DCC and Aviva.

Next for SIPPs was another new entry – the Fidelity Index UK Fund. This fund was also the eighth most bought fund for ISAs. Unlike the actively managed UK fund described above, this fund passively tracks the FTSE All-Share Index and thereby seeks to increase the value of an investor’s holding over a period of five years or more. The Fund has on ongoing charge of just 0.06%.

The Vanguard LifeStrategy 80% Equity Fund was in seventh place for ISA purchases. This fund sits at the more aggressive end of Vanguard’s LifeStrategy family of funds. While it invests mostly in index tracking funds from the Vanguard stable, there is an active element in that the manager has discretion over which funds are selected and how much is allocated to each.

The Fidelity Global Technology Fund – in ninth place for ISAs – continues to hold comparatively modest weightings in the market’s largest stocks. For example, the Fund’s second and third largest holdings – Microsoft and Apple – accounted for 5.6% and 5.1% of the portfolio at the end of June.

At 6.5% of the portfolio, Taiwan Semiconductor, the maker of high-end Nvidia AI chips, is the top holding.

Three Legal & General index trackers took most of the remaining places. The Legal & General Global Equity Index Fund returned in tenth place for ISA purchases after a temporary absence in June. This fund tracks the FTSE World Index.

In eighth for SIPPs was the Legal & General Global 100 Index Trust, which tracks the S&P Global 100 Index. Just behind it was the Legal & General UK index Trust. This fund tracks the FTSE All-Share Index on a net total return basis and does so by holding positions in all, or substantially all of the shares in the Index. The fund has an ongoing charge of 0.18%.

Finally, the Jupiter India Fund held on as the tenth most popular fund for SIPPs. This is an actively managed fund that aims to beat the MSCI India Index. Current large holdings include the tobacco manufacturer Godfrey Phillips India, State Bank of India and Bharat Petroleum. Financials account for the largest sector weight, at 22% of the portfolio³.

India’s stock market continued its remarkable multi-year run in July, in the wake of a general election that saw Prime Minister Modi entering a third term in power. Hopes run high that the newly formed government will accelerate the development of Indian infrastructure, thereby supplementing the country’s already strong growth potential.

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

1. Fidelity Cash Fund
2. Fidelity Index World Fund
3. Legal & General Global Technology Index Trust
4. Fidelity Index US Fund
5. Legal & General Cash Trust
6. Royal London Short Term Money Market Fund
7. Vanguard LifeStrategy 80% Equity Fund
8. Fidelity Index UK Fund
9. Fidelity Global Technology Fund
10. Legal & General Global Equity Index Fund

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

1. Fidelity Index World Fund
2. Legal & General Global Technology Index Trust
3. Fidelity Cash Fund
4. Fidelity Global Technology Fund
5. Fidelity Index US Fund
6. Fidelity Special Situations Fund
7. Fidelity Index UK Fund
8. Legal & General Global 100 Index Trust
9. Legal & General UK Index Trust
10. Jupiter India Fund

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

Sources

¹ Bank of England, 5 August 2024

² LGIM, 30 June 2024

³ Jupiter Asset Management, 30 June 2024

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. The funds do not offer any guarantee or protection with respect to return, capital preservation, stable net asset value or volatility. 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. Direct shareholdings should generally form part of a well-diversified portfolio of other investments. 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.