What funds did investors buy in May?

Shares continued to rise amid a heady mix of takeover activity and buybacks in May, although progress was eventually capped by uncertainty around the timing of potential interest rate cuts. Markets appear to have settled for one rate cut or two at most from the Fed this year, given that a strong labour market and economy have slowed the drop in US inflation.

The AI train continued to roll in May led by Nvidia. An AI sales surge has seen Nvidia almost double in 2024, placing it in close reach of overtaking Microsoft as the world’s largest listed company. Quarterly results revealed the company expects to see revenue from its Blackwell next-generation chips later this year.

The announcement of a UK general election wrong-footed stock markets. Even so, UK shares generally showed resilience in the face of this additional uncertainty, given that neither main political party is expected to wield outlandish economic policies if it wins. Having recorded a record high mid-month at 8,455, the FTSE 100 settled just slightly below where it ended April.

Funds at opposing ends of the risk scale featured prominently among the best sellers in May, as Fidelity’s personal investors bought technology funds and cash funds in significant numbers. Global equity funds also drew strong support, while some ISA investors continued to buy an international income fund.

Once again, the Fidelity Index World Fund was the most bought fund for ISAs and was just pipped to the post for SIPPs by a cash fund. This fund tracks the MSCI World Index on a net total return basis and has enjoyed a positive five months so far this year. Returns are automatically converted back into sterling, providing UK investors with a straightforward and cost-effective route to geographic diversification. The fund’s ongoing charge is 0.12%.

The Fidelity Cash Fund, one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024, took first place for SIPPs and second for ISAs. The Fund’s SONIA benchmark interest rate remained steady at 5.2% in May, more than double April’s 2.3% inflation rate¹. SONIA reflects the rate that banks pay to borrow sterling overnight from other financial institutions and sits just below the current Bank Rate of 5.25%.

Two other money markets funds – the Royal London Short Term Money Market Fund and Legal & General Cash Trust – took mid-table positions for both ISAs and SIPPs.

The Fidelity Index US Fund was the only single country fund to feature on these lists, ranking third and sixth for ISAs and SIPPs respectively. Like the Fidelity Index World Fund, this fund tracks its target index (the S&P 500 in this case) on a net total return basis.

The Legal & General Global Technology Index Trust and Fidelity Global Technology Fund took fourth and fifth places for both ISAs and SIPPs.

The former tracks the FTSE World Technology Index and currently has 252 holdings. The ten largest holdings make up around 68% of the portfolio. Microsoft (17% of the Trust at the end of April) overtook Apple as the largest holding in January. Nvidia remains in third for now².

The Fidelity Global Technology Fund is actively managed equity fund and has comparatively modest weightings in the market’s largest stocks: Microsoft and Apple account for 5.1% and 4.3% of the Fund’s assets respectively. Taiwan Semiconductor (5.2%) – Nvidia’s main chip supplier – has graduated to being the top holding.

April’s new entrant for SIPP purchases – the Fidelity Multi Asset Allocator Growth Fund – climbed a place to seventh in May. As its name implies, this fund invests in a combination of shares and bonds. Shares currently account for 58% of the portfolio. This fund aims to increase in value over a period of five years or more and allocates at least 70% to index tracking funds.

The Fidelity Global Dividend Fund – the second of Tom Stevenson’s fund picks for 2024 – was in eighth place for ISA purchases. This fund is able to invest in some of the world’s strongest payers, reducing reliance on the UK stock market for income.

This fund aims for a dividend based total return – from dividends themselves and the dividend growth its holdings can deliver. Capital preservation is the top priority. Market sectors with robust characteristics such as consumer staples and pharmaceuticals retain strong representations alongside substantial exposures to industrials and financial services companies.

Next for ISAs and in tenth place for SIPPs was the Legal & General Global 100 Index Trust. This trust tracks the S&P Global 100 Index which is, in effect, a FTSE 100 for the world. A sign of the times – the US drugs giant Eli Lilly is the largest non-technology holding in seventh place³.

Another of Tom’s picks – the Legal & General Global Equity Index Fund – also remained popular, taking ninth place for SIPP purchases. This fund tracks the FTSE World Index.

Rounding out the table for ISAs was the Rathbone Global Opportunities Fund. This is a true global stock picker seeking businesses that are growing fast and shaking up their industries. The fund currently holds 54 stocks and has Nvidia, Microsoft and Costco as its top holdings. Amphenol – a US supplier of electronic and fibre cables and connectors – graduated to fourth position in the portfolio in April⁴.

Top 10 best-selling ISA funds on Fidelity Personal Investing in May 2024

1. Fidelity Index World Fund
2. Fidelity Cash Fund
3. Fidelity Index US Fund
4. Legal & General Global Technology Index Trust
5. Fidelity Global Technology Fund
6. Royal London Short Term Money Market Fund
7. Legal & General Cash Trust
8. Fidelity Global Dividend Fund
9. Legal & General Global 100 Index Trust
10. Rathbone Global Opportunities

Top 10 best-selling SIPP funds on Fidelity Personal Investing in May 2024

1. Fidelity Cash Fund
2. Fidelity Index World Fund
3. Legal & General Cash Trust
4. Fidelity Global Technology Fund
5. Legal & General Global Technology Index Trust
6. Fidelity Index US Fund
7. Fidelity Multi Asset Allocator Growth
8. Royal London Short Term Money Market Fund
9. Legal & General Global Equity Index
10. Legal & General Global 100 Index Trust

Source: Fidelity International. Gross ISA and SIPP sales in May 2024 for Personal Investors only.

Sources

¹ Bank of England, 04.06.24 and ONS 22.05.24
² LGIM, 30.04.24
³ LGIM, 30.04.24
⁴ Rathbones, 30.04.24

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