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A positive corporate results season underlining the growing importance of AI and data suggesting continued strength in the US economy helped markets drive further ahead in the first quarter. Nvidia ensured the AI bull kept running, with results showing quarterly revenues increasing to a record $22 billion in the final three months of 20231.
There were signs too of a hotly anticipated central bank pivot in favour of lower interest rates. The Federal Reserve persisted with its signalling of three rate cuts this year, despite slightly higher inflation in February. Switzerland set the ball rolling with an actual cut in late March.
Meanwhile, the long-awaited broadening out of the bull trend in stock markets to include some formerly unpopular areas finally began to play out. China’s stock market showed signs of breaking out of its longer term downtrend after the government acted to put a floor under share prices.
Japan’s Nikkei 225 Index finally beat its 1989 record high, driven by strong earnings reports and tech sector optimism. Closer to home, some depressed blue chip shares in London joined in the rally. In particular, banks rallied after profit surges driven by higher interest rates.
A confident mood in markets was reflected in an increase in the popularity of index tracker funds. Meanwhile, technology funds and money markets funds maintained a firm grip on the tables.
The top three funds for ISA and SIPP purchases were identical. The Fidelity Index World Fund cemented its position at the top as world markets kept rolling. This fund tracks the MSCI World Index converted back into sterling, so offers investors an uncomplicated and cost-effective route to geographic diversification.
The Fidelity Cash Fund took second place. While interest rates are anticipated to fall the second half of this year, they’re also expected to remain somewhat elevated over the medium term. Thus, money market funds are expected to continue to offer an attractive combination of safety and income going forward. The Fidelity Cash Fund is one of the four funds selected by Fidelity’s Investment Director Tom Stevenson as his picks of 2024.
In third position, the Fidelity Global Technology Fund was the most popular actively managed equity fund this year. While concentration risk has become an issue for indexed portfolios, this fund holds manageable positions. Microsoft (5.2%), Nvidia’s main chip supplier Taiwan Semiconductor (4.6%) and Apple (4.2%) are the three largest holdings.
The Fidelity Index US Fund maintained mid-table rankings over the quarter, posting a solid fourth and fifth for ISA and SIPP purchases respectively. In a similar vein, the Fidelity Index UK Fund took seventh and ninth places. Between them, these funds track what are arguably the two most important stock markets to UK investors – the S&P 500 Index and FTSE ALL-Share Index. Both indices are tracked on a net total return basis – so inclusive of dividends.
Fourth place for SIPPs went to the Royal London Short Term Money Market Fund. At the end of February, around three quarters of this fund was invested in cash and cash equivalents, with 18% in short-dated gilts and 5% in covered bonds2. The was another popular choice – in sixth place for SIPPs and ninth for ISAs.
The remained another highly popular choice. This fund tracks the FTSE World Technology Index. The AI boom saw Microsoft (currently 17.0% of the portfolio) overtake Apple (14.9%) as the fund’s largest holding in January. Nvidia, in third, saw its weighting increase to over 10% for the first time a month later3.
The Jupiter India Fund – in sixth for ISAs – was the highest placed new entry. Having boomed in 2023, India’s stock market appears to have entered a consolidation phase this year, with valuations becoming more of a concern. Time will tell if this is only a market pause. According to the IMF, India’s economy is anticipated to grow by around 6.5% both this year and next4.
The second of Tom Stevenson’s fund picks for 2024 – the Fidelity Global Dividend Fund – was the eighth most bought fund for ISAs. This fund aims for a dividend based total return – from dividends themselves and the dividend growth its holdings can deliver. Capital preservation is the top priority.
Europe accounts for the fund’s largest exposure at present, with the US close behind. Top holdings include the German stock markets operator Deutsche Boerse, the US media and communications conglomerate Omicon and the French pharmaceuticals giant Sanofi.
Another of Tom Stevenson’s fund picks – the – also fared well, taking tenth place for ISA purchases and eighth for SIPPs. This is another global tracker, this time with the FTSE World Index as its reference.
Finally, the Vanguard LifeStrategy 60% Equity Fund was in tenth place for SIPP purchases. This fund most closely matches the classic 60/40 shares-bonds mix that pension funds and other long-term investors often aim at.
While this fund invests primarily in index tracking funds from the Vanguard stable, there is an active element in that the manager has discretion over which funds are selected and how much is apportioned to each.
Missing from these lists were the Fundsmith Equity Fund and Rathbone Global Opportunities Fund, even though both saw continued strong demand, particularly during February.
Top 10 best-selling ISA funds on Fidelity Personal Investing in 2024
- Fidelity Index World Fund
- Fidelity Cash Fund
- Fidelity Global Technology Fund
- Fidelity Index US Fund
- Jupiter India Fund
- Fidelity Index UK Fund
- Fidelity Global Dividend Fund
Top 10 best-selling SIPP funds on Fidelity Personal Investing in 2024
- Fidelity Index World Fund
- Fidelity Cash Fund
- Fidelity Global Technology Fund
- Royal London Short Term Money Market Fund
- Fidelity Index US Fund
- Fidelity Index UK Fund
- Vanguard LifeStrategy 60% Equity Fund
Source: Fidelity International. Gross ISA and SIPP sales from 1.1.24 to 25.3.24 for Personal Investors only.
Sources:
1 Nvidia, 21.02.24
2 RLAM, 29.02.24
3 LGIM, 31.01.24
4 IMF, 30.01.24
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing into a fund, please read the relevant key information document which contains important information about the fund. Eligibility to invest in a SIPP or ISA and tax treatment depends on personal circ*mstances and all tax rules may change in the future. Withdrawals from a SIPP will not normally be possible until you reach age 55 (57 from 2028). Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
