With the April ISA deadline just around the corner, it’s a race against time to invest your £20,000 annual ISA allowance before the end of the tax year. I take a look at the six hot funds that were most popular with UK investors during February 2022, according to figures from Interactive Investor.
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The six most popular funds in February
Retaining its status as first choice among popular funds is Fundsmith Equity. It’s been a consistent performer over many years and is regularly recommended by experts. The L&G Global Technology Index has slipped down the list from third place in January to sixth in February, suggesting that technology stocks may be falling out of favour with investors.
1. Fundsmith Equity
Fundsmith equity is consistently one of the most popular funds. It’s a Warren Buffet-style fund that focuses on long-term investment. It’s performed well, growing at 44% over the last three years and 86% over the last five years. It invests in some of the biggest companies in the world, including Microsoft, L’Oreal and PayPal.
This fund is heavily weighted towards the US, with 74% invested in US equities. Because it’s a managed fund (rather than a passive fund that tracks the whole market) it has fairly high fees of 0.95%.
2. Vanguard lifestyle strategy 80%
This is one of three Vanguard funds in the list of popular funds. Vanguard is known for its low-fee passive investment funds that invest in the whole of a share index. You can own this fund for fees of as little as 0.22% per year as part of your stocks and shares ISA or pension fund.
This 80% fund invests 80% in equity and 20% in bonds and gilts, so it’s designed for investors who want slightly less exposure to the ups and downs of the stock market.
The fund has grown 29% in the last three years and 42% in the last five years.
3. Vanguard lifestyle strategy 100%
This is another Vanguard fund but with a different asset split. This is the 100% equity version of the company’s lifestyle strategy fund. It’s popular with long-term investors who have an appetite for higher risk and don’t want to invest in bonds.
This fund has grown 35% in the last three years and 51% in the last five years. Not bad for a fund that only charges 0.22% in fees!
4. Vanguard lifestyle strategy 60%
Yet another Vanguard fund is in fourth place in the list of popular funds. It invests 60% in equity and 40% in bonds and gilts. It’s a popular choice for investors who want a slightly lower risk investment portfolio with less exposure to stocks and shares.
This fund has grown 23% in the last three years and 33% in the last five years.
5. Baillie Gifford American
This fund is another regular favourite among investors who want exposure to US equity. It’s an actively managed fund that aims to outperform the S&P 500 index. It’s heavily focused on tech stocks, with large holdings in Shopify, Tesla and Amazon.
The fund has enjoyed price growth of 64% in the last three years and an amazing 144% in the past five years. Because it’s actively managed, you’ll pay relatively high fund fees of around 1.52%.
6. L&G Global Technology Index
This fund has slipped down the list from third place in January. It perhaps suggests that investors are becoming more nervous about having all their eggs in one basket and just investing in tech stocks.
The fund has enjoyed amazing price growth of 111% over the last three years and an eye-watering 173% over the last five years.
How to invest in funds
You can invest in funds through a stock and shares ISA. It’s a great way to protect your wealth from the taxman as you’ll be able to invest up to £20,000 each tax year with no tax to pay on any income.
If you’re looking for an ISA provider, then take a look at our top-rated stocks and shares ISAs. And if you’re new to investing, we’ve written a handy guide to stocks and shares ISAs for beginner investors.
Don’t leave it until the last minute: get your ISA sorted now!
If you’re looking to invest in shares, ETFs or funds, then opening a Stocks and Shares ISA could be a great choice. Shelter up to £20,000 this tax year from the Taxman, there’s no UK income tax or capital gains to pay any potential profits.
Our Motley Fool experts have reviewed and ranked some of the top Stocks and Shares ISAs available, to help you pick.
Investments involve various risks, and you may get back less than you put in. Tax benefits depend on individual circumstances and tax rules, which could change.
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About the author
Alice is a Suffolk-based personal finance writer specialising in pensions, tax, investment and small businesses. She is a qualified Chartered Accountant and has previously worked for KPMG London and Tesco Plc.
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