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What do ten of the most popular investment funds invest in?

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It’s getting near to the end of the tax year and that means there’s a lot of adverts encouraging us to invest in a stocks and shares ISA. But you don’t actually invest in an ISA, your money is invested in the funds or companies held within the ISA. So, what do the most popular funds invest in?

Ten of the most popular investment funds

I asked the data firm Morningstar to provide me with a list of the ten investment funds that had received the most money in the last year. That doesn’t mean they’re the most popular funds overall, but they are the funds that had received the most money in over the last 12 months. Some of these funds are available to individual investors (like you and me!) and others are aimed at large pension funds. These funds have a large minimum investment amount so are probably not an option for most people. I decided to include them anyway, as the idea of the article was to show you what some of the biggest funds invest in, rather than to provide any recommendations.  I then looked at each fund’s ‘fund factsheet’ to find out what the fund’s top ten holdings are.

SAVVY TIP: The top ten holdings just means the ten companies that the fund has invested the biggest percentage of its money in.

JARGON ALERT: Each fund I’ve mentioned has a letter or a letter and number as part of its name, such as I, T, A, B etc. This relates to their ‘share class’. You can find out what a share class is and why it matters in my article. What are different share classes in funds?

Here’s what I found (the funds are listed in order of popularity):

Fundsmith Equity I Acc 

This fund is managed by Terry Smith (hence, Fundsmith). It’s quite an unusual fund in that it has a small number of stocks (shares in different companies), typically between 20 and 30. Its strategy is to buy shares and keep (or hold) them for a long time.

SAVVY TIP: Quite a few investment funds have two or three times more stocks, and ones that track a particular stock exchange index may have hundreds.

Its top ten holdings are (in order):

  1. Paypal (worldwide US-based online payments company)
  2. Microsoft (global US-based computer, software and technology company)
  3. Waters (a US-based laboratory instrument and software company)
  4. Amadeus (a Spanish travel technology company)
  5. Philip Morris (a US-based tobacco company)
  6. Intuit (a US-based business and financial software company)
  7. Estee Lauder (a US-based cosmetics company)
  8. Stryker (a US-based global medical technology company)
  9. Facebook (a US-based global social media company)
  10. Novo Nordisk (a Danish global healthcare company)

SAVVY TIP: Because Fundsmith only invests in a small number of stocks, its top ten holdings are rather more important than they are for many other funds.

MINIMUM INVESTMENT: The minimum amount you can invest in the Fundsmith fund is £1,000, or £100 a month if it’s a regular investment.

BlackRock ACS US Equity Tracker T1 This fund aims to track the performance of the FTSE USA index. This index is made up of around 600 different companies, and the BlackRock fund invests in companies that make up the FTSE USA. It has shares in 620 different companies.

SAVVY TIP: This fund has been running since 2014 and is mainly used by institutional investors, such as UK pension funds, rather than individual investors. Its minimum investment level is £500,000.

Its top ten holdings are:

  1. Microsoft
  2. Apple (global US-based technology company)
  3. Amazon (global US-based online retailer)
  4. Facebook
  5. Johnson & Johnson (US-based medical devices and pharmaceutical company)
  6. JP Morgan Chase (multinational US-based bank)
  7. Alphabet Inc Class A (US-based holding company that owns Google, among others)
  8. Alphabet Inc Class C
  9. Exxon Mobil (global US-based oil and gas company)
  10. Bank of America (multinational US-based bank)

Royal London Global Equity Diversified M Acc This fund has a minimum initial investment of £100,000. It was launched in 2018 and aims to outperform the MSCI world stock market index by between 0.4% and 0.8% over a rolling three-year period, once any fees have been taken into account.

SAVVY TIP: The MSCI world index is made up of over 2,400 companies and is an accepted gauge of worldwide stock market activity

  1. Microsoft
  2. Amazon
  3. Exxon Mobil
  4. JP Morgan Chase
  5. Apple
  6. Verizon (multinational US-based telecoms company)
  7. Visa (global US-based payments technology company)
  8. Johnson & Johnson
  9. Berkshire Hathaway (a US-based conglomerate run by Warren Buffet)
  10. Alphabet

Vanguard Lifestrategy 60% Equity A Acc 

This is a passive fund, which means it tracks the performance of one or more stock market indices. In this case, the ‘lifestrategy’ bit means the fund divides money that’s been invested between shares and bonds (which are company or government loans). This fund aims to invest 60% of its money in shares. It doesn’t invest directly in companies, but rather invests the fund in other Vanguard index tracking funds and schemes.

Its top ten holdings are:

  1. Vanguard Global Bond Fund
  2. Vanguard FTSE Developed World ex-UK equity fund
  3. Vanguard FTSE All-Share index fund
  4. Vanguard US equity index fund
  5. Vanguard UK government bond index fund
  6. Vanguard emerging markets stock index fund
  7. Vanguard UK inflation-linked gilt index fund (a gilt is a UK government bond)
  8. Vanguard FTSE Developed Europe ex-UK equity index fund
  9. Vanguard investment grade bond index fund
  10. Vanguard Japan stock index fund

Minimum investment: The minimum amount you can invest is £500 and/or you can invest a regular minimum of £100 a month via a direct debit.

Vanguard FTSE UK All Share Index UT Acc 

This passive fund aims to track the performance of the FTSE All Share Index. The FTSE All Share Index contains all the companies that are traded on the main London Stock Exchange (around 850 of them).

SAVVY TIP: This fund doesn’t hold every single company that makes up the index. Instead, it holds most of the companies, plus a representative sample of the rest. It holds these companies in approximately the same weighting (or ratio) as their weighting in the index.

Its top ten holdings are

  1. HSBC (UK-based global bank)
  2. Royal Dutch Shell Class A (British-Dutch oil company, based in the Netherlands)
  3. BP (UK-based multinational oil and gas company)
  4. Royal Dutch Shell Class B
  5. AstraZeneca (British-Swedish multinational pharmaceutical company, based in the UK)
  6. GlaxoSmithKline (British multinational pharmaceutical company)
  7. Diageo (British multinational drinks company)
  8. British American Tobacco (UK-based global tobacco company)
  9. Rio Tinto (Australian-British mining company)
  10. Lloyds Banking Group (UK-based bank)

Vanguard LifeStrategy 40% Equity A Acc

This fund works in a similar way to Vanguard’s Lifestrategy 60% equity fund, but it has only 40% in shares.

Its top ten holdings are:

  1. Vanguard Global Bond Index Fund Pound Sterling Hedged Accumulation Shares
  2. Vanguard FTSE Developed World ex-U.K. Equity Index Fund Accumulation Shares
  3. Vanguard FTSE U.K. All Share Index Unit Trust GBP Accumulation Shares
  4. Vanguard U.K. Government Bond Index Fund Accumulation Shares
  5. Vanguard U.K. Inflation-Linked Gilt Index Fund GBP Gross Accumulation Shares
  6. Vanguard U.K. Investment Grade Bond Index Fund Accumulation Shares
  7. Vanguard U.S. Investment Grade Credit Index Fund Pound Sterling Hedged Accumulation Shares
  8. Vanguard U.S. Government Bond Index Fund Pound Sterling Hedged Accumulation Shares
  9. Vanguard U.S. Equity Index Fund Accumulation Shares
  10. Vanguard Euro Government Bond Index Fund Pound Sterling Hedged Accumulation Shares

Liontrust Special Situations R Inc 

This fund aims to create long-term capital growth. It invests mainly in UK-based companies. It doesn’t restrict itself to a particular sector (such as financial, oil and gas, pharmaceuticals) and can invest in smaller or larger companies. It can hold up to 10% of the fund in cash.

  1. GB £ cash (almost 9% of the fund is currently in cash)
  2. Diageo
  3. Royal Dutch Shell
  4. Relx (UK-based multinational information company)
  5. BP
  6. Compass Group (UK-based multinational contract catering company)
  7. GlaxoSmithKline
  8. Unilever (British-Dutch multinational consumer goods company)
  9. Reckett Benckiser (British multinational consumer goods company)
  10. Sage Group (British multinational software company)

Minimum investment: The minimum investment level is £100,000.

Baillie Gifford Multi Asset Gr P Acc 

This fund aims to take less risk than you’d be exposed to with a purely share-based fund. Like the Vanguard funds, it invests its money in other funds.

Its top ten holdings are:

  1. Baillie Gifford Emerging Markets Bond Fund
  2. Baillie Gifford Emerging Markets Leading Companies Fund
  3. Baillie Gifford Emerging Markets Government Bond Fund
  4. US Treasury Notes
  5. Baillie Gifford European Fund
  6. Goldman Sachs Cross Asset Trend Portfolio
  7. Baillie Gifford Worldwide Japanese Fund
  8. US Treasury Notes
  9. ETFS Nickel (an exchange traded fund which tracks the Bloomberg Nickel subindex)
  10. Japanese government bonds

SAVVY TIP: For holding number 4, 8 and 10, the fund invests in a particular type of bond.

JARGON ALERT: US government bonds are called Treasury bonds, Treasury notes or Treasury bills. Treasury bonds have the longest term at 30 years. Treasury notes have terms of up to ten years and Treasury bills have terms of up to a year.

Vanguard FTSE Developed World ex UK Equity Index Acc 

This fund aims to track the performance of the index that measures how stock markets around the developed world have performed. This index does not include companies that are listed on the London Stock Exchange.

Its top ten holdings are:

  1. Microsoft
  2. Apple
  3. Alphabet
  4. Amazon
  5. Berkshire Hathaway
  6. Facebook
  7. Johnson & Johnson
  8. JP Morgan Chase
  9. Exxon Mobil
  10. Nestle (Swiss global food and healthcare company)

PLEASE NOTE: These funds are not recommendations or endorsed by me. 

Related articles:

Women are better investors than men; what’s the evidence?

Investment jargon buster; investment terms explained

How to understand a fund factsheet

A guide to stocks and shares ISAs

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