Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
Baillie Gifford may be losing James Anderson, but they have won ISA season. They dominate the leader board when it comes to both the most popular funds and investment trusts chosen by last minute ISA investors. The strong performance of many of these funds can be partly attributed to the stellar rise of Tesla, which is included in many Baillie Gifford portfolios, and investors are clearly sitting up and taking notice. The sheer number of Baillie Gifford funds hitting the sweet spot with investors shows the investment group is far from a one trick pony and while the departure of James Anderson is of course a blow, success has not been limited to just Scottish Mortgage investment trust.
Based on AJBYI transactions.
The growth investment style favoured by Baillie Gifford has been in vogue for some time now, though there has been some rotation back to more cyclical value stocks in recent months, spurred on by the emergence of successful vaccines, which promise an economic recovery. Value investing hasn’t made a comeback with fund investors though, with Jupiter UK Special Situations being the only value fund in the top ten selected by ISA investors in the last month.
Share investors continue to fill their ISAs with both growth and value stocks however. Tesla and Unilever clearly sit in the former camp, and the recent fall in Unilever stock has no doubt prompted investors to buy in at an attractive entry point, with the price actually dropping below where it stood in the market panic of March last year. But value stocks like Lloyds and BP show share investors also want exposure to more cyclical areas of the market, and perhaps, dividends. IAG, Rolls Royce, and Cineworld sit even further in unfashionable territory, and reflect a preference for deep recovery plays, which are dependent not just on a broad global economic recovery, but on some sector specific relief from social restrictions too.
Argo Blockchain, the bitcoin miner, also remains popular, as one of the few ways for ISA investors to get exposure to cryptocurrency after the FCA banned the sale of crypto ETFs to retail investors earlier this year. Gamestop also continues to feature in the top ten list of most bought ISA shares, as investors seek to capitalise on a second wind for the meme stock.
Fundsmith retains top spot on the leaderboard for funds, and while its rival Lindsell Train Global Equity remains in the top ten, it has dropped down the rankings. Both funds employ a similar investment strategy, focusing on financially strong stocks which can compound earnings growth over the long term. This approach has fallen out of favour in recent months, as markets have got excited about the reflation trade, leaving both these funds uncharacteristically trailing their peers on a six month view. Long term performance is still strong, and both managers have proven pedigree that should reward investors going forward. But it appears the Fundsmith brand has stood up better against a dip in performance when it comes to attracting fresh investment.
With just a few days to go until the end of the tax year, last minute ISA investors may be rushing to beat the deadline and in a quandary about where to invest. One of the really useful things about a stocks and shares ISA is that you don’t have to invest it right away, so rather than make a hasty investment decision, investors can park this year’s allowance in cash, and buy themselves some thinking time. For those who are a bit cautious on the markets, a ‘park and glide’ approach could work well – parking money in cash and then drip feeding it into the market monthly, to smooth out the inevitable ups and downs.
Most popular investments with DIY investors
Below are the most popular purchases made by DIY ISA investors on the AJ Bell Youinvest platform between 1 March and 29 March 2021. For comparison the same data is presented for 2020. Green shading shows investments which have broken into the top ten this year; red shows investments which have fallen out of the top ten compared to last year.
|Fundsmith Equity||Fundsmith Equity|
|Lindsell Train Global Equity||Baillie Gifford America|
|Polar Capital Global Technology||Baillie Gifford Positive Change|
|Vanguard Lifestrategy funds||Baillie Gifford Global Discovery|
|Fidelity Global Special Situations||Fidelity Global Special Situations|
|Fidelity Index World||Vanguard Lifestrategy funds|
|BNY Mellon Global||Jupiter UK Special Situations|
|TB Evenlode Income||Polar Capital Global Technology|
|Franklin Templeton UK Mid Cap||Baillie Gifford Global Alpha Growth|
|Jupiter UK Special Situations||Lindsell Train Global Equity|
|Lloyds||International Consolidated Airlines|
|Royal Dutch Shell||Unilever|
|Scottish IT||Scottish Mortgage IT|
|Scottish Mortgage IT||City of London IT|
|City of London IT||Edinburgh Worldwide IT|
|F&C IT||Monks IT|
|Finsbury G&I IT||JP Morgan China G&I IT|
|Murray IT||Allianz Technology|
|Smithson IT||Baillie Gifford US IT|
|Temple Bar IT||Pacific Horizon IT|
|Monks IT||Polar Capital Technology IT|
|Polar Capital Global Technology IT||Smithson IT|
Trusts run by Baillie Gifford: Scottish Mortgage, Edinburgh Worldwide, Monks, Baillie Gifford US, Pacific Horizon
The data was correct until 29 March 2021.
These articles are for information purposes only and are not a personal recommendation or advice. You can’t pay into an AJ Bell Youinvest ISA if you’ve paid into another stocks and shares ISA this tax year. Paying into one of the other ISA types will restrict your remaining ISA allowance. If you’ve used up all of this year’s ISA allowance and take any money out, you won’t be able to pay it back in this tax year.