Passive funds and exchange traded funds (ETFs) provide a good way of accessing stockmarkets at low cost. It is possible to track everything from equities to gold or bonds – but what do investors favour the most?
We look at data from interactive investor to find out what the most-bought passive investments of 2018 have been so far.
The Vanguard LifeStrategy fund range dominated, with three of its five trackers taking the top three spots. The LifeStrategy funds are multi-asset passive funds that invest in various indices, with the equity weighting ranging from 20% to 100% and the balance held in bonds and cash. The Vanguard fund fee is low, at 0.22%.
Top of the most popular passive fund list (so far in 2018) is Vanguard LifeStrategy 80% Equity. The tracker has 34% in US equities, 20% UK equities and 14% in global bonds. Over three years this tracker returned 34%, and over one year it returned 8%.
The fact that 80% of this tracker is in equities indicates a relatively bullish preference among investors, particularly given that the second most-bought passive investment has an even larger equity allocation. The Vanguard LifeStrategy 100% Equity has 43% in US equities. It has 25% in UK equities and 13% in Europe ex UK equities. Due to its higher equity allocation, this tracker returned more with 41% over three years, and 11% over one year.
The third most-bought fund was the slightly more cautiously allocated Vanguard Life Strategy 60% Equity. This tracker returned 27% over three years and 6% over one year.
The fourth most-bought tracker fund was Vanguard FTSE Developed World FTSE ex UK. This tracker has 61% in US equities, 10% in Japan, 4% in each France and Germany. It is similarly US-focused as the previous ‘global’ equity funds, but it consciously excludes the UK from being tracked.
The fifth most-bought tracker was Vanguard US Equity Index. This tracker has 24% in the US information technology sector, 15% in financials, and 14% in healthcare.
Given that all the most-bought tracker funds focus on the US market, their largest individual holdings are the biggest constituents of the S&P 500: Apple (AAPL), Microsoft (MSFT), Amazon (AMZN) and Facebook (FB).
Meanwhile, UK-focused trackers such as HSBC FTSE 100 index and HSBC FTSE 250 index can be found much further down the list of popular investments.
While most investors still favour the US stockmarket over the UK stockmarket, it is worth noting that the FTSE 100 (UKX) has touched a new record high today, rising above 7,800. Despite slow economic growth in the UK, the weaker pound continues to boost the more internationally-oriented blue chips index.
This article provided by NewsEdge.