Fundsmith stands alone as investors flock to passives

Fundsmith Equity was the most bought fund on Interactive Investor’s (II) platform during November, the lone actively-managed strategy that made the top 10.

Terry Smith (pictured) attracted the attention of investors on the platform despite the fact Fundsmith Equity has delivered -15% YTD, according to data from Morningstar, the worst return of any fund featured in the top 10.

II suggested that the presence of only one actively-managed fund in the top 10 best buys might be a reflection of the ongoing uncertainty about which active funds are best placed to prosper in a time of such great uncertainty.

Vanguard continued to dominate the rest of the top 10 as its strategies occupied all the rungs from second to seventh. Its LifeStrategy 80% Equity and LifeStrategy 100% Equity retained second and third place, respectively.

HSBC American Index and Fidelity Index World were new entrants, placing eighth and 10th, respectively. These additions were at the expense of Royal London Short Term Money Markets, the only other active strategy to feature in October’s top 10 list, and the L&G Global Technology Index.

Undented popularity

Turning to investment trusts, Scottish Mortgage and City of London retained their positions in first and second place on the II best buy list, despite enduring a punishing year thus far.

The rest of the table saw considerable change, with Blackrock World Mining, Vinacapital Vietnam Opportunities, Polar Capital Technology, and Newriver Reit all breaking into the top 10 at the expense of Renewables Infrastructure Group, Primary Health Properties, Henderson Far East Income, and JP Morgan Global Growth and Income.

Blackrock World mining returned an impressive 34.7% in the year to 1 December, and 137% in the three years to the same date.

Kyle Caldwell, collectives specialist at Interactive Investor, said: “Over the course of 2022, just two investment trusts have consistently kept their places in the top 10: Scottish Mortgage and City of London.

“Scottish Mortgage, which invests in businesses aiming to deliver high growth in the years to come, has consistently occupied the top spot since June 2019, with its recent performance woes not denting its popularity.

“The other trust that’s been in the top 10 all year is City of London, which predominately invests in FTSE 100 listed dividend-paying companies. The trust, which has been managed by Job Curtis since 1991, has raised its dividend for 56 consecutive years. It offers a high dividend yield today, of around 4.9%.”

Telephone giants still pay

Commenting on direct equity investments made on the platform, Keith Bowman, senior investment analyst at Interactive Investor, said that Vodafone’s near 10% drop in share price left investors taking interest.

He added: “Similarly, interim results from BT Group also failed to inspire, leaving its share price down 6% over the month. An acceleration in broadband line losses and weakness for its corporate enterprise business accompanied group-wide plans to cut costs even further.”

Despite the weaker performance, Bowman noted that historic dividend yields of over 6% for both Vodafone and BT continued to offer investor attraction.

In more positive news, Bowman said: “Shares for banking favourite Lloyds railed by more than 10% during November. An autumn statement attempting to reverse damage from the previous mini budget helped calm mortgage rates, for which Lloyds is a big provider. This was aided by expectations that future global interest rate rises may now prove less aggressive.

“Hopes of an easing in Chinese pandemic restrictions and a freeing of its economy helped keep potential beneficiaries, such as the miners and Glencore, in the eye of investors. The latter’s shares rose by almost 13% over the month.”

Top 10 most bought investments on Interactive Investor, November 2022