Kate Marshall 11 June 2018
May was a mixed month for global stock markets.
US technology companies made a strong comeback after a rocky start to the year. This boosted returns from the US stock market.
But European and emerging stock markets made a small loss. Uncertainty about Italy's political outlook caused some weakness in European share prices. And ongoing trade tensions between the US and China stopped some investors investing in Asian and emerging market companies.
Where did HL's SIPP clients invest?
Our clients took advantage of their SIPP’s wide investment choice by investing across a number of different sectors last month.
We’ve listed the most popular funds with our clients in May below – although this isn’t designed to be personal advice or a guide on how to invest. You should choose investments based on your own objectives and attitude to risk.
Investment values can fall as well as rise, so there’s no guarantee you’ll make a profit – you could get back less than you put in. If you’re not sure whether an investment is right for you, please ask us for advice.
Funds are listed in alphabetical order. Lindsell Train Global Equity and LF Lindsell Train UK Equity hold shares in Hargreaves Lansdown plc.
More than one way to go global
A lot of HL clients favoured funds that can invest anywhere in the world, though each fund uses a different approach to investing globally.
Some larger companies are world famous, but lesser-known smaller businesses often have the greatest growth potential, though they’re also higher risk. Funds such as Standard Life Global Smaller Companies aim to take advantage of this.
Alan Rowsell, the fund's manager, looks for small businesses going through change, which could help improve their earnings and see them grow into larger firms. It's an approach that's worked well over the long term, though this isn’t a guide to future performance.
Baillie Gifford Global Discovery was another popular fund that invests in small and medium-sized companies.
Other fund managers have shown good money can also be made by investing in larger companies. Nick Train and Michael Lindsell, who run Lindsell Train Global Equity, are two of HL investors' favourites. They favour companies that own brands that are recognised across the globe. For example, Walt Disney, PepsiCo, Heineken, and Nintendo. Please note as Lindsell Train Global Equity is an offshore fund, you can’t make a claim from the UK Financial Services Compensation Scheme.
Fundsmith Equity is another fund that focuses on some of the world's biggest firms. Both of these funds tend to invest in a small selection of what the managers think are some of the world’s best businesses. This means each investment can have a larger impact on performance, so it’s a higher-risk approach.
The Legal & General International Index Trust takes a different approach. Instead of trying to outperform the stock market, it simply aims to track it. It does this by investing in a wide range of companies from all over the world. At the moment it invests in around 2,300 companies.
Investors looking for a regular and high income chose the EdenTree Higher Income Fund. Around three-quarters of the fund invests in shares, and the remainder is mainly invested in bonds, which typically pay a fixed rate of income. The fund currently yields 4.17%, though because yields are based on the income paid in the past, they’re not an accurate guide to the income you’ll get in future.
Please note that this fund takes charges from its capital, which can increase potential for the value of your investment to go down.
Focus on Asia
We think Asia offers exceptional long-term growth potential and a lot of HL clients tend to agree. This is a higher-risk area to invest though, so you should expect a bumpy ride.
First State Asia Focus was the top choice for investing in the Asia Pacific region. It's run by a management team with a long record in these markets and a focus on companies they think will prosper even during tougher times for the economy. We think their long-term approach should see investors in good stead.
We think emerging markets have great long term potential growth, but please be aware they are a higher-risk area for investment.
Don’t forget about the UK
Some investors have been put off the UK recently because they’re concerned about Brexit and the political outlook. But the UK is still home to some great companies that we think can thrive over the long term.
Last month the LF Lindsell Train UK Equity, Standard Life UK Smaller Companies, and Marlborough UK Micro Cap Growth funds were popular with investors. The Lindsell Train fund is run by Nick Train in a similar way to the Global Equity fund, but instead it's focused on UK companies, with some exposure to smaller companies too.
The others invest in small companies, which increases risk. Marlborough UK Micro Cap Growth is managed by Giles Hargreave, who has the support of a great team to help run the fund. They've built an exceptional track record investing in this area of the market, though this shouldn't be seen as a guide to future performance.
The Standard Life fund is run by Harry Nimmo. He rides his winners, which means he tends to keep hold of small companies as they grow into large ones. So the average company size is larger than some other small cap funds.
You can normally only access money in your pension from 55 (57 from 2028). Tax rules can change and the value of any benefits depends on individual circumstances.
If you have any questions, give our helpdesk a call – 0117 980 9926. We’re here Monday to Thursday 8am-7pm, Friday 8am-6pm, and Saturday 9:30am-12:30pm.