How US tech and ESG funds dominated investor choices this year
There was plenty to disrupt markets in 2024: around half the world went to the polls, there was a raft of geopolitical instability, and western governments struggled against a rising tide of populism. Yet markets glided elegantly higher. A lot of this was down to the ongoing strength in the US technology stocks, which defied worries over valuation to deliver another strong year of returns for investors.
Against that backdrop, it is unsurprising that this has been where investors directed their cash this year. When we look at the fund flows on the platform for the year to date, overwhelmingly, it is North America and global funds that dominate.
While other sectors including utilities and, in particular, financials, have had a strong year, tech behemoths such as Nvidia, Meta, Amazon and Alphabet have all served investors well over the past 12 months.
Please remember that the value of investments will fluctuate and returns may be less than the amount originally invested. Tax treatment depends on your individual circumstances and tax rules can change. Chelsea does not offer advice and so if you are unsure of anything please contact an expert adviser.
Geographic preferences
Investors tended to focus on global funds from well-established groups with a history of strong performance. These included Rathbone Global Opportunities, IFSL Evenlode Global Equity and T. Rowe Global Focused Growth Equity.
There were still signs of a lingering home bias in investor choices. Where investors did pick single-country funds, they tended to be in the UK. These included funds such as Artemis UK Select and Man GLG Income, both on our Core Selection. Artemis UK Select is a multi-cap fund, and has therefore benefited from the revival in smaller and mid-cap UK companies this year. It can also short certain companies, which has contributed to its long-term strength. Man GLG Income is another multi-cap fund focusing on valuation opportunities within the UK market.
Elsewhere, Japanese funds continued to gather assets, in spite of a major wobble in the market in August. Popular funds here included M&G Japan, which is a concentrated portfolio of up to 50 companies. Manager Carl Vine has a slight value bias, with the fund consistently outperforming under his tenure.
The only other area of note was India. Jupiter India also saw strong inflows, suggesting investors believe there is more to go for in India in spite of its recent run of strong performance.
Fixed income
Despite optimism that 2024 would be the ‘year of the bond’, equity funds have remained more popular than bonds. This is in contrast to Europe and the US, where ETF flows into bond funds were at record highs**. In the UK, this may have been a response to the continued uncertainty over interest rates.
Popular funds include Artemis Corporate Bond and Nomura Global Dynamic Bond, both of which are managed by industry veterans in the shape of Stephen Snowden and Dickie Hodges respectively. The Artemis Corporate Bond fund takes a long-term strategic review of markets, but will also take advantage of short-term opportunities as they arise.
*Source: MSCI index factsheet, 29 November 2024
**Source: IFA Magazine, 12 November 2024
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.