Fundsmith and Scottish Mortgage top sales chart despite anti-growth sentiment

Terry Smith’s (pictured) £25.8bn equity strategy was, once again, the most bought fund on Interactive Investor (II) in March, in spite of the rotation away from growth investing and the tech sell-off since the start of the year.

But Fundsmith’s pole position was more of an anomaly than an indicator of broader sentiment. Investors, instead, opted to funnel their money into passive funds in March, with six of the top 10 funds from Vanguard.

II said its monthly best buys “do not take into account regular monthly investors, so are only telling a story of more ‘hands on’ investing trends”.

Plenty of defensive armoury

The growth-oriented Scottish Mortgage Investment Trust also remained glued to the top of II’s monthly list of top 10 investment trusts for the second month on the bounce.

Shares in the £15bn trust have lost around 20% of their value year-to-date as its top holdings like vaccine maker Moderna and Chinese tech giant Tencent have been battered amid rising inflation and interest rates and volatility from the crisis in Ukraine.

Again, while this might suggest the message that growth investing is no longer fashionable has fallen on deaf ears, the departure of Polar Capital Technology, Edinburgh Worldwide and Baillie Gifford US Growth Trust from the top 10 investment trusts list is evidence to the contrary.

Kyle Caldwell, collectives specialist at II, said: “Investors are in two camps. Some are viewing defence as the best form of attack at a time when there’s no shortage of headwinds: the war in Ukraine, inflation at its highest level in decades and interest rates moving higher.

“This is reflected by RIT Capital Partners, Ruffer Investment Company and Personal Assets entering our top 10 most-bought trust table for March. Capital Gearing has also maintained its place. The quartet are wealth preservation investment trusts, which prioritise protecting investor capital. Each has plenty of defensive armoury in an attempt to weather stock market storms.”

Russian companies soaking up cash

For the second consecutive month, Polymetal, Evraz and Eurasia Mining – all Russian-oriented miners – were listed among the most-bought equities.

Richard Hunter, head of markets at II, said: “The conflict between Russia and Ukraine continues to engender a split between hope and despair.

“Reports of some progress in talks aimed at ending the war continue to be offset by further reports of Russian atrocities which have seemingly strengthened the resolve of other nations to ratchet up sanctions once more.”

Head of investment Victoria Scholar added that interest in the three firms was “driven by demand for Russian assets after a sharp sell-off at the onset of the war”.

“Demand was also driven by investor interest in the mining sector, which has outperformed lately amid the favourable backdrop of commodity price inflation.”

10 most bought investments in March 2022

Source: Interactive Investor