Holly's Blog: Cherry-picking and Best Sellers
3 July, 2020
Back in March when the world as we know it blew up (100+ very loooooong days ago), people remained resilient despite the market falls. More than half of you told us that you were planning on buying – but favoured adding to your investments with arguably ‘safer’ broad-brush trackers and global funds.
This has slightly shifted now and in June, 35% of you selectively picked more specific sectors and stocks which you think will do better than the average. There’s a bit more cherry-picking and tinkering going on – the chart below shows you how Boring Money reader actions changed from just May to June.
What have you done over the last month?
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You’re also slightly more confident that we’ve gone through the worst – 44% of you think the FTSE 100 will stay broadly the same from now to the end of the year, compared to 36% back in March. Most of our readers optimistically think that the trajectory is up.
What have 1.9 million investors done over the last month?
We have taken the top 10 selling fund lists from 3 of the UK’s largest investment platforms - with 1.9 million customers who have £128 billion between them – and looked at how their customers voted with their feet. (Tweet this 👆) What did they buy in June?
About half of the bestsellers are global funds OR low-cost easy-peasy 'multi asset' fund options – the investment equivalent of a pre-prepared balanced meal with a little bit of everything in it, blended and maintained for you. A dollop of the US, a chunk of Europe, and a dash of Asia – et voila.
On the other side of the equation, the more gung-ho are backing specific areas of the economy (mostly tech and health/pharma) with some sustainable funds creeping in. The UK is broadly out of favour – 68% of you think the UK economy will get worse by the end of the year, compared to 52% of you back at the end of March.
Top of the Pops
If we merge these three platforms’ lists, the following funds appear in the top 10 bestsellers for at least two out of the three (if you want to see the three bestseller lists in full click (https://www.boringmoney.co.uk/learn/articles/top-funds-june-2020/))
Baillie Gifford American
Baillie Gifford Long Term Global Growth
Baillie Gifford Positive Change
Lindsell Train Global Equity
Polar Capital Global Technology
Vanguard LifeStrategy 80% Equity
The popularity of some US funds is an interesting and relatively hardcore bet investors are making. For many reasons. Investment gonks may be interested in a piece in today’s FT – a Citigroup poll of 140 fund managers released this week found that 62% believed Joe Biden would win in November – up from just 30% back in December last year. If he gets in, anticipated higher taxes and a higher minimum wage impact the corporate earnings outlook, whilst at the same time clean energy stocks should get a huge boost. What’s less clear is whether he would seek to break up the tech giants under stricter antitrust rules. What does Biden mean for tech stocks? These stories will ramp up over the summer.
Before any of you get too excited about Polar Capital Global Technology, named above, hold your digital horses. The fund ‘soft closed’ this week. A soft close is when the managers realise they have got too big too quickly and are not confident that they can efficiently manage the fund if it gets any bigger. So the fund does not accept any new money from any new customers. Let’s take this to its extreme – imagine I run the Holly Global Equity Fund and it has £500 billion in it. Well done me :0) And let’s say I like the stock Tesla. It is “only” worth £160 billion (now bigger than Toyota, fact fans) – so if I allocate say 10% of my fund here, I buy £50 billion of stock (which technically is impossible because Elon et al won’t like that) and I own about 30% of the company, which is suddenly an acute governance pain in the bum. You get the point. Size ain’t always easy.
Over and out for this week
Thanks to everyone who has helped us over the past few months with our surveys – it helps us so much to build up a picture of what’s going on.
Have a lovely weekend. I am taking the kids for an early dinner at our local pub tomorrow. More exciting than anything they might put on my plate is the prospect of not having to empty the dishwasher on Sunday morning. THAT, my friends, is the stuff that dreams are made of!