With this in mind we’ve analysed the assets under administration (AUA) of Trustnet Direct to find out which are the most popular options on the portfolio.
This shows that investors have flocked to recent high profile launches, while following persistent investment trends such as the search for income and a belief in stock pickers.
Source: FE Analytics
The most popular fund with Trustnet Direct investors was the biggest launch of the year - the CF Woodford Equity Income fund, which accounts for 5.07 per cent of the platform’s AUA.
FE Alpha Manager Neil Woodford launched the fund in June, when it attracted £1.6bn in assets during its two-week offer period and broke records for initial inflows.
CF Woodford Equity Income has since grown to £3.4bn in size and has already returned 5.11 per cent to investors. This makes it the IMA UK Equity Income sector’s best performing fund over this time period.
Performance of fund vs sector and index since launch
Source: FE Analytics
Despite the fund’s short history, Woodford’s strong track record in managing Invesco Perpetual’s flagship UK equity income products have seen it well received by analysts. Square Mile, for example, gives the fund its top ‘AAA’ rating.
CF Woodford Equity Income has a clean ongoing charges figure (OCF) of 0.75 per cent and targets a 4 per cent yield.
The second most popular fund is Terry Smith’s Fundsmith Equity, which makes up 4.07 per cent of AUA. Smith launched the fund in November 2010 and it has returned 90.15 per cent since then, making it the IMA Global sector’s third best performing fund over this time.
The five FE Crown-rated fund also appears to be popular with investors at the moment, as its factsheet has been the most viewed on FE Trustnet over the past month. This is in part due to its consistent outperformance, as it is first quartile over one and three years.
Smith runs a concentrated buy-and-hold portfolio. The fund mirrors his belief that most managers trade too frequently and hit investors which fees that are too high.
At launch, Smith said: “The fund management industry is broken. The vast majority of fund investors suffer from punitive fee structures, overtrading, fund proliferation, closet indexing, and over-diversification. The net result is poor performance.”
Fundsmith Equity has a clean OCF of 0.99 per cent.
First State Asia Pacific Leaders is in third place, being responsible for 2.16 per cent of assets on FE’s platform.
The five crown-rated fund has been managed by FE Alpha Manager Angus Tulloch since launch in December 2003. He was joined by Richard Jones as co-manager earlier this year.
Since inception the portfolio has returned 380.35 per cent and is the IMA Asia Pacific Excluding Japan sector’s second best performing fund. It is also first quartile over one, three and five years.
Performance of fund vs sector and index since launch
Source: FE Analytics
It appears on the FE Research team’s Select 100 list of preferred funds, where it is highlighted for its consistent sector-beating returns, its track record in protecting investors’ capital and Tulloch’s stock picking skills.
The FE Research team said: “Tulloch and Jones are likely to maintain a conservative stance, as they believe that taking on additional risk is unlikely to be rewarded in the current market. This approach should help the fund in uncertain markets, although it will lag behind if the global economy quickly recovers.”
First State Asia Pacific Leaders has clean ongoing charges of 0.89 per cent.
In fourth place is a passive vehicle - the iShares MSCI World GBP Hedged UCITS ETF - which makes up 2.15 per cent of AUA. It aims to track the growth and income of the MSCI World 100% Hedged to GBP Index as closely as possible and has an OCF of 0.55 per cent.
A recent FE Trustnet study showed active managers have trouble outperforming the global space, with more than 80 per cent of IMA Global members failing to beat the MSCI World over three years.
As the table on the first page shows, this is not the only index tracker among the most popular funds on Trustnet Direct. L&G Global Health & Pharmaceutical Index, Vanguard US Equity Index and Vanguard LifeStrategy 80% Equity feature in the top 10, while Vanguard FTSE Developed World ex UK Equity Index and HSBC FTSE 100 are in the top 30.
As you can see, active funds with strong track records and well-respected managers are popular with Trustnet Direct investors. Mark Barnett’s Invesco Perpetual High Income and Richard Woolnough’s M&G Optimal Income appear in the top 10.
Looking across the top 30 shows income is a strong theme with the above funds being joined by the likes of Newton Asian Income, Unicorn UK Income, Majedie UK Income and Newton Global Higher Income.
Meanwhile, stock pickers are popular with investors. Included with Trustnet Direct’s 30 most popular funds are Giles Hargreave's Marlborough UK Micro Cap Growth, Philip Rodrigs’ R&M UK Equity Smaller Companies and Nick Train’s CF Lindsell Train UK Equity portfolios.
