What funds did investors buy in November?

After a fraught October, stock and bond markets bounced back very strongly in November. From America’s tech giants to gold, bitcoin and emerging markets, the month’s moves were as swift as they were substantial. As such, November provided a model argument for holding on during troubled times. Rebounds tend to surprise in terms of their timing and can be unexpectedly rewarding.

The main driver was a growing consensus that US interest rates have most probably peaked this cycle. Now may be the time to dare to look ahead to interest rate cuts as early as next year, even as central banks continue to guide for lower rates a year later.

That has implications for a wide variety of assets in terms of their relative worth. It also undermines the attractiveness of the US dollar as a place to park cash. Both factors lifted gold, which produces no investment income (unlike a paper currency) and is priced in dollars (fewer dollars needed to buy an ounce of gold).

Was this just a Santa rally come early? Only time will tell, but the evidence grows that the worst has passed for inflation and interest rates at least. This might be expected to provide further support for shares, bonds, commercial property and a number of other assets into the New Year.

Fidelity’s personal investors continued to favour the three disparate categories of index tracking, money market and technology funds in November. Thus, names familiar from previous months remained in firm evidence in the top-10. The Invesco UK Equity High Income Fund was the notable new entrant.

The Fidelity Index World Fund and the Fidelity Cash Fund took the top two slots for both ISA and SIPP purchases last month. The former tracks the MSCI World Index converted back into sterling, so was automatically positioned to capture last month’s rebound in world markets.

The Royal London Short Term Money Market Fund figured strongly once again, taking third and fourth place for SIPP and ISA purchases respectively compared with second and third in October.

Technology funds proved even more popular than over recent months. The Legal & General Global Technology Index Trust – in third place for ISAs and fourth place for SIPPs – just edged out the Fidelity Global Technology Fund as the number-one technology pick.

The former tracks the FTSE World Technology Index, so Apple and Microsoft are the runaway largest holdings accounting for around 37% of the portfolio between them. However, the fund’s top-10 holdings account for 67% of the portfolio, hinting at the diversification characteristics the lie beneath¹.

With inflation returning to more manageable levels, UK equity income funds may well gain in popularity. Britain’s consumer price index (CPI) fell back to 4.6% in October and looks set to be comfortably below the yield available from many high quality equity income funds by the end of the year².

The Invesco UK Equity High Income Fund, in seventh place for ISA purchases last month, has an historic yield of around 4.1%³. Please note this yield is not guaranteed.

This fund is actively managed and favours undervalued businesses, without an inbuilt sector or style bias. The aim is to achieve a total return weighted to income and a yield higher than the FTSE All-Share Index. The fund’s largest holdings, beyond the usual favourites like BAT, BP and Shell, include Next, RELX and Ferguson.

The Fundsmith Equity Fund remained popular in November, taking seventh place for SIPPs and ninth place for ISAs. As for the technology funds mentioned earlier, an outsized gain in the value of Microsoft proved beneficial in November.

However, while Microsoft is now the Fundsmith Equity Fund’s largest position, this is no longer a technology-focused portfolio. Consumer staples and healthcare companies accounted for around 55% of the fund last month, with technology making up only around 11%⁴.

Finally, the Legal & General Global 100 Index Trust stayed for a third month among the most bought funds for SIPPs while failing to make a big impression on ISA buyers. This fund tracks the S&P Global 100 Index, which could be viewed as a FTSE 100 for the world. A sign of the times – the US drugs giant Eli Lilly is the fund’s largest non-technology holding in seventh place⁵.

For investors already looking to 2024, Fidelity’s Investment Director Tom Stevenson has just posted some of his thoughts on the year ahead.

Top 10 best-selling ISA funds on Fidelity Personal Investing in November 2023

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Legal & General Global Technology Index Trust
4. Royal London Short Term Money Market Fund
5. Fidelity Global Technology Fund
6. Fidelity Index US Fund
7. Invesco UK Equity High Income Fund
8. Legal & General Cash Trust
9. Fundsmith Equity Fund
10. Legal & General UK Index Trust

Top 10 best-selling SIPP funds on Fidelity Personal Investing in November 2023

1. Fidelity Cash Fund
2. Fidelity Index World Fund
3. Royal London Short Term Money Market Fund
4. Legal & General Global Technology Index Trust
5. Fidelity Global Technology Fund
6. Legal & General Cash Trust
7. Fundsmith Equity Fund
8. Legal & General Global Equity Index
9. HSBC FTSE All World Index
10. Legal & General Global 100 Index Trust

Source: Fidelity International. Gross ISA and SIPP sales in November 2023 for Personal Investors only.

Sources:

¹ LGIM, 31.10.23
² ONS, 15.11.23
³ Invesco, 31.10.23
⁴ Fundsmith, 30.11.23
⁵ LGIM, 31.10.23