They have accounted for 20.8 and 14.27 per cent of Chelsea client ISA sales respectively in 2012, underlining the preference for income among UK investors this year. On a fund-specific level, star manager Neil Woodford’s Invesco Perpetual High Income portfolio was the most popular choice with both adult and Junior ISA investors. M&G Global Dividend, Aberdeen Emerging Markets – which is soon to be closed to new investors – and Newton Asian Income also appeared in both the adult and Junior ISA top-10 best sellers list.
Top-10 best-selling funds of the 2012 ISA season
Source: FE Analytics
Higher-risk emerging market, Asian and small cap funds were more popular with longer-term investors holding a Junior ISA, while those with a more immediate focus opted for income strategies.
The biggest surprises among the top-10 lists are perhaps the £299m Kames Investment Grade Bond fund, which is run by Euan McNeil and Stephen Snowden, and the £46.5m AXA Framlington Biotech portfolio, which has recently been taken over by Gemma Game. With the exception of these two funds, the other 18 featured on the list are firm favourites with UK investors.
The Newton Asian Income and M&G Global Dividend portfolios are particularly popular at the moment, both more than doubling in size to £1.8bn and £2.5bn respectively in the last 12 months.
Sustained inflows into Woodford’s Higher Income fund have seen it swell to more than £12bn in assets under management (AUM), making it one of the biggest vehicles in the entire unit trust and OEIC universe.
While the recent surge in equity markets has seen an increasing number of investors flock to more cyclically focused funds, the stellar long-term track record of Woodford’s reliable portfolio has seen it maintain its popularity with UK investors.
Performance of funds vs sector and benchmark over 10-yrs
Source: FE Analytics
According to FE data, it is the best-performing fund in its entire IMA UK Equity Income sector over the last decade, with returns of 132.92 per cent.
Darius McDermott, managing director at Chelsea, says that the biggest surprise was the fall in popularity of multi-asset funds.
"The Mixed Investment 20-60% Shares sector, which has been a mainstay among investors for some years now, has fallen right down the popularity ranks," he said. "Less than 1 per cent of our client adult ISA money has gone into this sector in the last three months."
"US equities had seen some increased interest in January and February but that interest now seems to have waned with last minute investors, and flows have petered out. With the eurozone problems continuing, European equities are being almost completely shunned."