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

We can take a sneak peek back at October and quickly build a picture of what retail investors are up to. I can loosely summarise the ‘wisdom of the crowds’ as this:

1. Money market funds – cash-like investments which pay around 5% a year at the moment with very minimal risk. Safe, boring, and cheap. (I think ‘boring’ can sometimes be a compliment, btw!).

What job are they doing for us? Cash-like things we can hold in the tax quarantine of an ISA and a pension, avoiding the tax on the ‘interest’ we earn here.

2. Global tracker funds – low-cost pre-packaged parcels of investments which give us access to 1000s of international shares in one ready-made bundle. We’re not trying to be smart and pick the winners – we’re just in the game that is global capitalism.

What job are they doing for us? Cheap access to a belief that in general, large global firms will still make money and gawd knows precisely which ones will be the winners, so just buy lots and spread your bets. These are pretty mainstream, sensible options for those who don’t like the agony of choice!

3. Jupiter India – access to major Indian firms and a cherry-picked circa 70 Indian companies. I share the disclaimer that India is my investment nemesis. I always call it wrong because I want to believe in the growth fundamentals of this country I love and have marveled at for years. And sometimes I’m not patient enough for these long-term trends. But I did top up some holdings in this fund a few months ago. Up 17% over the last 12 months, you can see why it’s attracting interest... but this should never be more than a ‘side dish’ on your investing menu.

What job is it doing for us? Something spicy at a time when many regions feel at the mercy of geo-political tension. As I’ve said, I’m a sucker for the business case for India, with its young, vibrant population. The question is around the timeframes.

Have a read below for more information on what is popular with investors right now. If you’re a more confident investor, and you fancy picking a few sectors or regions, you may find the investment trust bestsellers more interesting, as they tend to be more focused and attract a savvier investor.

The popular Fundsmith Equity appeared in three out of four of the bestselling lists of of the major platforms we cover. The fund is well-known for investing in a small number of companies (generally 29-30) that they believe are high quality, resilient, and providing good value. Fundsmith Equity started their fund in 2010 and have achieved an impressive average year-on-year return of 14.8%, with 68% of the months between now and inception being months of positive performance.

In October, the fund opened a position in Fortinet, which is a cybersecurity company with headquarters in California. The Fortinet stock is down 16% in the past month, however over a longer 5-year period, has returned 250%.

Top contributors to Fundsmith's performance in October include Microsoft and Nike, with both companies returning over 7% across the month. If we look across all of 2023 however, the two companies have had different fortunes, with Microsoft up a massive 51% YTD and Nike down 13% YTD.

The City of London Investment Trust appeared in all four platforms' bestselling Investment Trust lists in October. The Trust aims to provide long-term in income and capital, principally by investing in equities listed on the London Stock Exchange, and has close to £2b in assets under management.

The Top three largest holdings are Shell, Unilever, and BAE Systems. The latter is a British multinational arms, security, and aerospace company, and is one of the largest defense contractors in the world. The stock price has more than doubled in the past 5 years and is up by over 10% in October.

Ethical investors should stay away; weapons, tobacco, alcohol, and oil are all prevalent holdings within the portfolio. In total, the portfolio consists of 86 holdings across a wide range of sectors, with a UK exposure of 83%. It trades at close to NAV and currently has a dividend yield of 5.32%.

The FTSE 100 was in the Top 10 bestselling ETFs of all four platforms in October, after missing out in September. Performance of the Index was strong in September, with growth of over 2%, however, October actually saw a drop of close to 4%. This made it the worst performing month for the FTSE 100 since May. This poor performance can be partially attributed to commodities, with BP, Shell, and the broader oil and gas sector all returning negatively, as these companies feel the effect of a drop in energy prices compared to this time last year.

The International Monetary Fund (IMF), which is a major financial agency of the UN, has downgraded its forecasts for economic growth in the UK in 2023 and 2024. One of the reasons for this is the stubborn nature of the high inflation, which remained at 6.7% in September. Whilst the current rate is lower than the 41-year high of 11.1% in October 2022, it is still substantially higher than the Bank of England's 2% target rate.