What funds did investors buy in January?

THE January effect is a tendency for the markets to perform well in the first month of the year. It doesn’t always hold true, but a strong start to 2023 means it has this year.

In the UK, the FTSE 100 neared a new all-time high, while stock markets all over the world have posted gains a range of factors combined to boost sentiment. China’s economy has come back to life after Covid restrictions were lifted, while inflation eased back and encouraged the view that interest rates may not need to rise as far as feared.

Despite better news on the horizon, investors remained cautious with their portfolios. Sales data for January showed a similar trend to December as cash funds secured the top spot among SIPP holders, while low-cost index trackers grabbed the attention of ISA holders.

The Fidelity Cash Fund was the best-selling fund among SIPPs in January – a significant leap, given the fund was actually the sixth best-selling SIPP fund back in December.

But there was less demand for the fund among those with ISAs. In January, the fund fell to the seventh best-selling fund. Back in December, it was the second most popular fund.

ISA holders instead favored low-cost index trackers like the Fidelity Index World Fund and the Fidelity Index US Fund.

The passively managed Fidelity Index World Fund tracks the MSCI World Index. As such it holds a large weighting in the US stock market, and its largest holdings include tech giants Apple and Microsoft.

It’s been a difficult year for tech, including some of the largest companies in the world. After many years in which they seemed impervious to threats 2022 proved much more difficult, but short-term recovery may be on the horizon.

Dedicated tech-based funds also made the list. The Fidelity Global Technology Fund was the fifth most popular fund in the SIPP best-sellers. Despite a difficult period, it appears investors are looking ahead to better times when it comes to tech firms.

Interestingly, the fund was less popular among ISA investors – it was only the ninth most popular fund. Since ISAs are less long-term than a SIPP, it indicates that perhaps investors want to err on the side of caution and prefer an index to gain access to tech companies.

Investors continued to flock to the UK. For both SIPP and ISA holders, UK-focused index funds like the Fidelity Index UK Fund and the Legal & General UK Index Trust Fund were among the best-selling funds. It follows a similar trend to the previous month.

The FTSE 100 is a good indicator of the general state of the UK stock market, since its value is more than 90% of the value of the entire UK market. It neared its all-time high in January, showing how investor sentiment towards the UK is positive.

Global dividend funds also featured among the SIPP and ISA best-sellers. They included the Fidelity Global Dividend Fund which seeks dividends from around the world.

Top 10 best-selling ISA funds on Fidelity Personal Investing in January 2023

  1. Fidelity Index World Fund
  2. Fidelity Index US Fund
  3. Legal & General UK Index Trust Fund
  4. Fidelity Index UK Fund
  5. Fidelity Global Special Situations Fund
  6. Fundsmith Equity Fund
  7. Fidelity Cash Fund
  8. Fidelity Global Dividend Fund
  9. Fidelity Global Technology Fund
  10. Fidelity Special Situations Fund

Top 10 best-selling SIPP funds on Fidelity Personal Investing in January 2023

  1. Fidelity Cash Fund
  2. Fidelity Index World Fund
  3. Fidelity Index UK Fund
  4. Fundsmith Equity Fund
  5. Fidelity Global Technology Fund
  6. Vanguard LifeStrategy 80% Equity Fund
  7. Rathbone Global Opportunities Fund
  8. Fidelity Global Dividend Fund
  9. Legal & General Multi-Index 7 Fund
  10. Royal London Short Term Money Market Fund

Source: Fidelity International. Gross ISA and SIPP sales in January 2023 for Personal Investors only.

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