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

August remained a tricky time for investors as nerves remain about potential future recessions, and the short-term power of cash remains compelling. When interest rates are 5.25%, the so-called ‘risk premium’ we expect from investing gets higher and fewer investors are convinced it’s worth it.

There are also very few pockets of perceived opportunity, meaning investors are playing it relatively safe, avoiding big sector or regional bets and backing large, diversified global funds.

Once again in August we saw investors piling into the relative haven of short-term money market funds. Royal London’s fund is a perennially popular option, with abrdn’s Sterling Money Market fund making it to the bestsellers on Hargreaves Lansdown.

Huge passive fund producer Legal and General is also taking in money, as investors embrace its cash trust but also its low-cost Global Technology Index fund. With an Ongoing Charge Figure of just 0.32%, and featuring investor darling Nvidia as its third largest pick making up over 7% of this fund, it’s a low-cost way to access a large global basket of tech stocks.

Finally Terry Smith continues to do no wrong in the eyes of investors and Fundsmith keeps its spot in the investors’ Hit Parade.

Despite – or maybe because of – a 3-year loss of -28%, Scottish Mortgage is a bestseller for August, featuring in the top 10 trusts on 3 major platforms.

Looking at the 3 trusts which feature on 4 major platforms, there is a more specific sector pick in the form of Greencoat UK Wind, which is up nearly 50% over the last 5 years. JP Morgan’s Global Growth and Income Trust is also remaining popular. With a dividend yield of nearly 4%, as the name suggests it offers investors an income stream, and has also gone up in value by about 12% over the last year.

If you look under the bonnet here, there are a lot of tech stocks lurking – Microsoft, Amazon, Nvidia, Meta, etc – so it's worth investors checking that they're as diversified as the names of their funds and/or trusts suggest.

City of London is an example of one such trust which will offer up quite a different suite of investments. Think old school – with holdings such as Unilever, Shell, HSBC and BAE Systems. It won't win any sustainability prizes but the trust is old, esteemed and not into ‘Johnny Come Latelys’ for those who like their investments unfaddy and traditional.

ETFs are easy, shortcut ways to invest in a wide range of things from a given region or sector. They're like investment playlists.

Investors’ love affair with the US continued in August and Vanguard’s S&P 500 fund was the most popular with retail investors, who bought this in both a dollar version and a pound version. The GBP option removes currency risk and means any returns will just be down to what happens to those 500 shares in the index – not whether the dollar goes up or down.

Despite lacklustre performance going back years, some are still keeping the faith with the FTSE100. iShares’ Core FTSE100 fund was amongst the bestsellers on all 4 major platforms.

Interestingly, we see more ‘short selling’ funds appear on interactive investor’s lists, telling us there are more investors who are betting on a fall in both the US and UK markets. These leveraged funds are hardcore options which can make a lot of money – but also lose a lot. Not for the faint-hearted.