Best-Selling Funds, Investment Trusts and ETFs of July 2023

July was a positive month for global equities, with UK, US and European markets all ending in the green. Investors felt more optimistic upon seeing inflation rates drop below forecast and there is growing expectation in the UK that there's light at the end of the tunnel after a long period of sharp interest rate increases.

Fidelity Index World and Fundsmith Equity continue to remain popular funds with UK investors. The Fundsmith Equity fund is currently comprised of only 27 different companies. The top 4 holdings include Microsoft, Danish pharmaceutical company Novo Nordisk, as well as French luxury brands L'Oreal and LVMH; all of which returned between 18% - 34% so far this year. Combined, these holdings make up around 30% of the fund and have contributed positively to Fundsmith Equity's YTD performance of 9.4%.

Royal London's Short Term Money Market fund appeared in the best-selling list of 3 out of the 4 providers we track. Money market funds invest in a portfolio of short-term cash deposits and other liquid low-risk instruments - making it a safe place to park some money. Funds like this have become increasingly popular as interest rates have rocketed in 2023, as returns have the potential to exceed the interest earned on money left in the bank.

S&P 500 ETFs continue to be at the forefront of retail investors' minds in July. The index has returned close to 17% so far this year, although the vast amount of this has come from the excellent performance of FAANG stocks. This combination of Facebook (Meta), Apple, Amazon, Netflix and Google have become ever-increasing parts of the S&P 500 over recent years, as they have continued to outperform the index. The S&P 500 is often viewed as a proxy of the US economy, which can be problematic given the relatively large influence of a few companies within it. It is important to differentiate between the different components, sectors, and industries of large indices in general - otherwise you may end up a little less diversified than you initially anticipated.