What January blues? Fund investors up their game in first month of 2018

Sheridan Admans, Investment Manager at The Share Centre, examines The Share Centre’s top purchased and sold funds in January 2018:

Article updated: 16 February 2018 10:00am Author: Sheridan Admans

  • 35% rise in funds traded from January 2017 compared to January 2018
  • Investors continuing to seek returns outside UK borders in January 2018
  • Top three most sold effected by the collapse in government contractor Carillion

Top five purchased funds in January 2018 from The Share Centre:

1 Legg Mason Japan Equity
2 Man GLG Continental European Growth
3 Fundsmith Equity
4 Jupiter India
5 AXA Framlington Global Technology

A 35% increase in funds traded from January 2017 compared to January 2018 is likely due to a rise in optimism among investors coming into a new year, perpetuated by rising stock markets supported recently by growth in corporate profits, an expanding US economy and tax reform policies.

A deeper analysis of investors trading in the first month of 2018 continues to suggest investors prefer to diversify their portfolios away from the long standing home bias of investing in the UK.

Japan holds on to the top investment destination of choice for investors who may have taken some reassurance that Abenomics will continue as a result of the re-election of Shinzo Abe at the back end of last year. Meanwhile, the progress being made by the reformist pro-business government of India and the favourable outlook may explain the presence of the Jupiter India fund.

Interest in the Man GLG Continental European Growth fund is unsurprising given that falling unemployment, improving policy reforms and reduced budget deficits across the continent are providing a positive backdrop for growth in Europe.

All the while, investors continue to see value and growth potential in the technology sector at a time when some market commentators have been arguing its overvalued, particularly FAANG stocks; Facebook, Amazon, Apple, Netflix and Google.

Top five sold funds in January 2018 from The Share Centre:

1 LF Woodford Equity Income
2 First State Global Listed Infrastructure
3 Invesco Perpetual High Income
4 M&G Recovery
5 Aberdeen Emerging Markets Equity

It’s not surprising that funds associated with the infrastructure sector feature heavily in the top sold list. The collapsed government contractor Carillion, who failed to find a rescue package and subsequently fell into liquidation grabbed headlines in January. The news was dominated by the story putting a renewed focus on the Support Service sector and questions were then asked about how these companies operate.

The presence of Neil Woodford’s Equity Income fund as well as the Invesco Perpetual High Income fund could be down to their investments in Carillion as well as another government contractor Capita whose shares plunged 40% after it announced a deep restructuring programme.

The M&G Recovery fund has experienced a significant proportion of capital outflows in the last few years, as market conditions have favoured more growth and momentum led strategies. The Aberdeen Emerging Markets Equity fund performance started to lag the IA Global Emerging Markets sector in mid-2017 and has really struggled to catch back up. With Emerging Markets delivering solid returns in 2017, some investors may have chosen to seek out alternatives in their year-end portfolio reviews.

*Data was analysed over the following time period: 1/01/18 – 31/01/18 and is based on the number of trades made by customers at The Share Centre. The top five bought and sold funds are based on the net position.

All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Sheridan Admans portrait photo
Sheridan Admans

Investment Manager

Sheridan co-manages our TC Share Centre Multi-manager funds and heads our team of research analysts. He is a chartered wealth manager and qualified financial adviser, and his qualifications include the Securities & Investment Institute (SII) Diploma and an MBA in investment analysis.

View our Platinum 120 Funds