Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
Encouraging corporate results and enthusiasm over the transformational potential of AI were strong drivers of markets in the first four months of the year. Expectations of lower interest rates in the second half of the year underpinned sentiment, although slightly stronger inflation readings in the US eventually caused investors to rein in their rate-cut expectations in April.
Meanwhile, the long-awaited broadening out of the bull trend in stock markets to include some formerly unpopular areas finally began to play out. China’s stock market broke out of its longer term downtrend amid signs of a strengthening economy and as the government acted to put a floor under share prices.
Japan’s Nikkei 225 Index finally exceeded its 1989 record high, driven by strong earnings reports and tech sector optimism. Closer to home, the FTSE 100 reached new record highs in April, as depressed blue chip shares in London joined the global rally. Banks and miners were among the winners.
Fidelity’s personal investors maintained a bias towards big tech over the period, through both indexed and actively managed funds. With interest rates staying high, cash funds also figured prominently.
The top two funds for ISA and SIPP purchases were the same. The Fidelity Index World Fund consolidated its position at the top as world markets kept rising. This fund tracks the MSCI World Index converted back into sterling, so offers investors an uncomplicated and cost-effective route to geographic diversification. The fund’s ongoing charge is 0.12%.
The Fidelity Cash Fund took second place. The fund’s SONIA benchmark interest rate remained at 5.2% in April, easily beating inflation1. SONIA reflects the rate that banks pay to borrow sterling overnight from other financial institutions and it’s close to the current Bank Rate of 5.25%.
As such, this fund continues to offer an attractive combination of safety and a real-terms income. It should continue to do so even if, as markets expect, the Bank of England reduces its Bank Rate once or twice in the second half of the year. The Fidelity Cash Fund is one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024.
Technology funds were in third place – the for ISAs and the Fidelity Global Technology Fund for SIPPs. The same funds reversed also took fifth place for ISAs and sixth for SIPPs.
The Legal & General Fund tracks the FTSE World Technology Index and, in January, the AI boom saw Microsoft (currently 17.0% of the portfolio) overtake Apple (13.5%) as the fund’s largest holding. However, both companies have seen their weightings fall as a percentage of the Index over the past two months, helping a little to alleviate concentration risks. On the other hand, Nvidia, in third, has seen its weighting increase to 11.7% compared with 8.6% in January2.
The Fidelity Global Technology Fund is an actively managed equity fund and has comparatively modest weightings in the market’s largest stocks: Microsoft and Apple account for 5.2% and 3.6% of the fund’s assets respectively. Taiwan Semiconductor (5.2%) – the main producer of chips for Nvidia – is the second largest holding.
The Fidelity Index US Fund was the only single country tracker fund to feature on these lists, ranking fourth and fifth ISAs and SIPPs respectively. This fund tracks the S&P 500 Index on a net total return basis – so inclusive of dividends. Naturally, Microsoft, Apple and Nvidia are its largest holdings.
The Fidelity Global Dividend Fund – the second of Tom Stevenson’s fund picks for 2024 – was the sixth most bought fund for ISAs and was in ninth place for SIPPs. This fund aims for a dividend based total return – from dividends themselves and the dividend growth its holdings can deliver. Capital preservation is the top priority.
Europe accounts for the fund’s largest exposure at present, with the US close behind. Top holdings include the German stock markets operator Deutsche Boerse, the US media and communications conglomerate Omicon and the French pharmaceuticals giant Sanofi.
Two more money market funds – the Royal London Short Term Money Market Fund and – took mid-table positions for SIPPs.
The Jupiter India Fund was the seventh most bought fund for ISAs. This fund has a highly selective investment approach which has served it well over the longer term. Current large holdings include the tobacco manufacturer Godfrey Phillips India, Bharat Petroleum and HCL Technologies, an IT consulting multinational.
Going in to this month’s general election, at which Narendra Modi looks poised to continue in power for a rare third term, India’s economy appears to be in good shape. In April, the IMF upgraded its 2024 economic growth forecast for India to 6.8%, while sticking with its 6.5% growth estimate for 20253.
Another of Tom’s picks – the – also fared well. It took eighth place for ISAs and seventh for SIPPs. This fund tracks the FTSE World Index.
Rounding out the tables were two long-time favourites notable for their idiosyncratic positioning. The Fundsmith Equity Fund was in ninth and tenth respectively for ISAs and SIPPs. In April, the fund added a small position in Texas Instruments. New holdings are a relatively rare occurrence for this fund, which has a strong tendency to maintain its positions over the longer term.
Consumer staples and healthcare companies remain the fund’s largest weightings, which now account for around 54% of the portfolio. Technology makes up only around 12% – about 1% up on March – although outsized gains from Microsoft and Meta – the fund’s second and third largest holdings at the end of March – have contributed strongly to returns this year4.
Finally, the Rathbone Global Opportunities Fund – was in tenth for ISAs. This is another global stock picker seeking businesses that are growing fast and shaking up their industries. This 54 stock portfolio currently has Nvidia and Microsoft as its top holdings, with Costco in third and the Dutch chip lithography supplier ASML in fourth.
Technology accounts for around 16% of the current portfolio, as do industrials. The fund’s largest exposure (23%) is to consumer discretionary companies5.
Top 10 best-selling ISA funds on Fidelity Personal Investing in 2024
- Fidelity Index World Fund
- Fidelity Cash Fund
- Fidelity Index US Fund
- Fidelity Global Technology Fund
- Fidelity Global Dividend Fund
- Jupiter India Fund
- Fundsmith Equity Fund
- Rathbone Global Opportunities Fund
Top 10 best-selling SIPP funds on Fidelity Personal Investing in 2024
- Fidelity Index World Fund
- Fidelity Cash Fund
- Fidelity Global Technology Fund
- Royal London Short Term Money Market Fund
- Fidelity Index US Fund
- Fidelity Global Dividend Fund
- Fundsmith Equity Fund
Source: Fidelity International. Gross ISA and SIPP sales from 1.1.24 to 30.4.24 for Personal Investors only.
Sources
1 Bank of England, 1.5.24
2 LGIM, 31.0.24
3 IMF, 16.4.24
4 Fundsmith, 30.4.24
5 Rathbones, 31.3.24
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circ*mstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
