Best-selling investments in July 2022 - and rising rates
18 Aug, 2022
How did funds do in July 2022?
Let us know what you think of the current market situation by posting a comment.
New inflation numbers out this week showed the cost of living is rising at over 10% a year. Kapow!
We know that investors are feeling rattled and trading less, and personal sentiment about our own financial outlook is gloomy. 47% of all investors tell us they expect their own financial situation to get worse and just 12% think it will get better.
Of course the outlook remains very volatile and it’s hard to see obvious pockets of opportunity. So what to expect?
Against headlines dominated by financial woe-is-me, the tech-heavy Nasdaq index in the States has rather quietly shot up by about 23% since the middle of June.
Interest rates are on the rise - sectors such as energy, industrials, information technology and financials have historically shown the strongest correlations to interest rates. Or – put in plain English – they do well when rates are heading up. We can see from this month’s platform's best-selling shares, it’s all about oil, mining and financials.
For further reading check out this month’s guest article on energy – or consider the piece on utilities if inflation is your main concern.
What other investment types might do well (or less badly?)
There has been an ongoing battle between Growth and Value investors for years now.
Growth is all about the future – the potential for high growth in years to come. If Growth were a person, it would be a Hollywood actor. Whereas Value is all about finding solid established companies which are not that thrilling but have improvements on the horizon. Value is the librarian.
Growth companies could be loss-making today, but are full of promise about the future, and will typically will have a more immediately interesting story to tell. They’re on the front page of the consumer magazines and in the limelight. Whereas Value companies have typically fallen out of favour and are on the rail with a ‘Sale’ tag on it.
Although growth funds have performed better over recent years, value funds had their moment in the sun in the first few months of 2022 as the world went mad and suddenly certainty and boring felt a bit more desirable.
Which is best?
I personally think these classifications are a bit old-fashioned. In the same way that many firms classified as ‘tech’ are in fact just modern companies with efficient operating models. (Amazon, for example.) However they do remind us that diversification is about so much more than not having everything in the UK, for example. A mix of styles is also sensible.
If you are highly exposed to Growth funds and want to look at Value funds, then funds such as Ninety One Special Situations fund and Jupiter UK Special Situations funds are popular with investment professionals.
You can look at Morningstar for independent fund research, or look at the bestsellers on platforms’ Best Buy lists shown in this email for inspiration.
On the growth side, then investor darling Scottish Mortgage has had a torrid time – it’s down 14% over the last 6 months but up 17% over the last three months as general tech stocks to which it’s so heavily exposed, have rallied. How’s that for a rollercoaster ride??
If you are looking for help to filter the thousands of funds available out there, then you can:
Visit our Fund Filter, which we compile with independent research firm FE Fund Info – these 110 funds represent the most popular funds with investment professionals and retail investors today
Look at the combined Best Buy lists from platforms and see which funds, trusts, ETFs and shares consistently make the grade
Visit Morningstar to get their analyst rating on any fund you are considering
What do you think? Let us know by adding a comment below.
Holly
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