This article is part of the special series, Investing with ISAs.
Morningstar's 'Perspectives' series features guest contributions from third parties such as asset managers, academics and investment professionals. The below article was written by Darius McDermott, the managing director at Chelsea Financial Services.
Equities are the Clear Winner
There has been a marked increase in risk appetite amongst ISA investors so far this year. This has meant equities have been the real winner this ISA season. According to our data, UK equity funds have remained the best sellers, capturing just under 30% of sales, but there has also been an increase in interest for overseas equities, with Asia ex-Japan being the most popular (10%) in this category, followed by global equities (7%).
The most interesting development has been that the Europe ex-UK sector has had more interest this year (with almost 7% of sales) than the global emerging markets sector (6%). In addition, North American equities, which are usually greatly under-represented in the portfolios of UK investors, attracted almost 5% of inflows. This follows a trend which began last year, but which has really taken hold this ISA season.
Meanwhile, just one fixed income sector has made it into the top ten best sellers (Strategic Bonds) and the amount invested in the asset class has fallen by a quarter from 20% of total sales last year to just 15% today.
The property and absolute return sectors have been shunned, attracting less than 1% of sales each, and the mixed investment sectors have seen less than 1% between them.
Best-Selling Fund Sectors for ISAs
Rank |
IMA Sector |
1 |
UK Equity Income |
2 |
UK All Companies |
3 |
Strategic Bond |
4 |
Asia Pacific ex-Japan |
5 |
Global |
Just One Bond Fund in the Top Ten
When it comes to best-selling funds for ISA investments, the Invesco Perpetual High Income fund still tops the list. However, there is just one bond fund in the mix compared with three last year, and Asian funds have shot up the table with the Newton Asian Income Fund and the First State Asia Pacific Leaders Fund in the top five. There is also a US equity fund-- the AXA Framlington American Growth fund--for the first time in many years.
Top 10 Best-Selling ISA-Eligible Funds
Rank |
Fund |
Morningstar Analyst Rating |
Fund Manager |
1 |
Neil Woodford | ||
2 |
Paul Read & Paul Causer | ||
3 |
Jason Pidcock & Caroline Keen | ||
4 |
Angus Tulloch & Alistair Thompson | ||
5 |
Stuart Rhodes | ||
6 |
Tom Dobell |
||
7 |
Stephen Kelly | ||
8 |
Adrian Frost & Adrian Gosden |
||
9 |
Nigel Thomas |
||
10 |
Anthony Cross & Julian Fosh |
This article was written using fund and sales data that was collected on February 28, 2013, by Chelsea Financial Services.
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