Best-selling funds, investment trusts and ETFs of September 2023

Fidelity Index World continues to prove a popular fund choice, with low fees and consistently strong performance. The fund aims to track the performance of the MSCI World Index, which seeks to capture the performance of large and mid-sized public companies across 23 developed market countries. Effectively, this acts as a proxy for the global economy and suits investors looking for cheap, diversified access to stocks around the world.

L&G Global Technology has a specific focus on the IT sector, tracking the FTSE World Technology Index. 85% of the fund is held in US equities, with a large concentration in specific stocks, including 18% in Apple and 17% in Microsoft. This has been hugely advantageous for the fund in 2023, with both Apple and Microsoft bouncing back from dips last year to return 43% and 37% YTD respectively.

Money market funds invest in highly liquid, short-term investments, including cash and cash equivalents, alongside high-credit rating debts such as the US treasury. Money market funds are designed to offer liquidity and can act as a place to park your money when you're not sure what to invest in, or when markets feel choppy and you'd rather wait for more clarity. They also allow you to benefit from cash rates, offering better returns than bank accounts. As money market funds are invested in short-term securities, fund managers can roll over investments to higher-yielding securities, allowing them to benefit from interest rate increases quickly.

It has been a good start to the 2023/34 tax year for investors looking for low-risk returns. Cash, which for so many years has been a dead zone asset class, has offered a decent yield thanks to ever rising interest rates. The Bank of England has hiked base rate three times this tax year alone, and on top of 10 previous consecutive rises. And while many are now calling the top of the interest rate cycle, it has meant cash savings accounts, and money market funds are offering an enticing yield to savers and investors.

If you’ve been investing for income over the previous decade equities have been most compelling asset class. But today, lower risk assets such as corporate bonds, government bonds including gilts, and even cash, are giving equity yields a run for their money.

It is apparent that HL clients are aware of this, with money market funds being the most popular sector in the first half of this tax year. The top 10 most bought funds include no less than six money market funds, alongside three global funds, with a growth-style bias and one Indian equity fund. This mix is typical of the top 50 most bought funds – money market funds dominate the most popular list, alongside a peppering of technology funds, quality growth equity funds, and regional equity funds covering the US, Europe and India.

A word of warning to investors planning to continue these trends however – it is only equities that can offer dividend growth and capital growth, so if you’re looking to build a portfolio with a sustainable income and the opportunity to beat inflation over the long term, make sure you have a balanced portfolio which includes a mix of equities, bonds, alternatives and cash.”