Bestseller M&G Optimal Income, whose manager Richard Woolnough previously expressed concerns over the size of his fund, has received £3.6bn in inflows in the past six months, pushing total AUM up to £15.6bn.
Meanwhile Standard Life GARS took in £1.9bn over the period, pushing its AUM up to £17.4bn.
Further down the list of bestsellers were First State Global Emerging Markets Leaders and Cazenove UK Opportunities, which took in £680m and £525m respectively. Both funds have announced their intention to stem inflows later this year, raising the question of whether investors are trying to get into these funds while they still can.
Darius McDermott, managing director of Chelsea Financial Services, says this can often be the case when funds have a window before they actually soft-close, but that he thinks it is purely the strong performance of these two funds that is drawing investors in.
"I think people were piling money into them anyway because they’re so good," he said.
Top-20 bestselling funds of 2013
| Name | Fund size | Inflows (approx) |
|---|---|---|
| M&G Optimal Income | £15.6bn | £3.6bn |
| Standard Life GARS | £17.4bn | £1.9bn |
| M&G Global Dividend | £7bn | £1.7bn |
| Halifax UK Growth | £5.9bn | £1.5bn |
| Newton Asian Income | £4bn | £840m |
| Baillie Gifford Diversified Growth | £3.7bn | £725m |
| First State Global Emerging Markets Leaders | £4.3bn | £680m |
| Cazenove UK Opportunities | £1.8bn | £525m |
| Old Mutual Voyager Diversified | £1.1bn | £505m |
| Newton Real Return | £8bn | £500m |
| Fundsmith Equity | £1.5bn | £460m |
| Threadneedle American Extended Alpha | £1bn | £445m |
| Newton Global Higher Income | £4.1bn | £440m |
| M&G Global Macro Bond | £814m | £400m |
| M&G European Strategic Value | £507m | £325m |
| Halifax UK FTSE All Share Index Tracker | £2.3bn | £295m |
| M&G Global Convertibles | £990.6m | £290m |
| M&G European Corporate Bond | £2.3bn | £285m |
| Standard Life European Equity Income | £1.6bn | £280m |
| BlackRock European Dynamic | £1.8bn | £270m |
Source: FE Analytics
McDermott says the fact that funds such as M&G Optimal Income and Standard Life GARS – which aim to offer positive returns with relatively low volatility – top the list comes as no surprise.
"We’re terming funds like this 'super-franchises'," he said. "GARS, for example, is the clear market leader in terms of size for the Absolute Return sector. It’s probably bigger than the entire sector put together."
He adds that the five crown-rated M&G Optimal Income fund benefits from its manager’s excellent long-term track record.
A few lesser-known names made it onto the list of bestsellers, including the £1.5bn Fundsmith Equity fund, run by veteran equity manager Terry Smith.
"Fundsmith Equity is on our wider buy list," McDermott said. "It’s had really solid performance and since launch they’ve done really well."
The £1.5bn global equity fund has picked up 56.16 per cent since its launch in November 2010, more than twice that of the IMA Global sector and MSCI World index.
Performance of fund vs sector and index since launch
Source: FE Analytics
The fund requires a minimum investment of £1,000 and has ongoing charges of 1.69 per cent.
Another lesser-known fund that has picked up large inflows this year is the £3.7bn Baillie Gifford Diversified Growth fund.
McDermott (pictured) says Chelsea has not paid much attention to Baillie Gifford in the past.
"That’s something we’re going to correct in the near future," he said. The fund, which sits in the IMA Specialist sector, aims to achieve long-term capital growth at a lower risk than equity markets – an aim it has achieved over the last three years.
According to FE Analytics, the fund has an annualised volatility of just 5 per cent, compared with approximately 12 per cent for both the MSCI World and FTSE All Share indices.
However, the fund, managed by Patrick Edwardson and Mike Brooks, has underperformed both indices over the last three years.
The only real surprise in the top-20, according to McDermott, is the Halifax UK Growth fund, which he says has continued to demonstrate abysmal performance.
"It must be being sold by the banking network [pension funds]. It’s a consistent poor performer so it’s a surprise to see it on any top-selling list," he said.
The fund is bottom quartile over three, five and 10 years and just third quartile over one.
Over the last decade, it has gained 97.13 per cent while the IMA UK All Companies sector has made 130.48 per cent and the FTSE All Share is up 140.92 per cent.
It has not fared well in the recent downturn either, losing more than the sector and index over the last one and three months.
Following star manager Richard Buxton’s announcement he was to leave Schroders for Old Mutual, his flagship Schroder UK Alpha Plus fund saw outflows of more than £1bn in the first six months of the year, the most of any fund.
Tom Dobell’s out-of-favour M&G Recovery fund also experienced mass redemptions, losing more than £700m in the first part of the year.
Perhaps unsurprisingly, the BlackRock Gold & General fund was another one investors piled out of as commodity prices continued on their downward spiral.
