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Most popular ISA funds in August

11 September 2018

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Turkey stole international headlines in August for all the wrong reasons.

President Trump applied tariffs on steel, an important export for Turkey. The Turkish Lira lost around 40% of its value compared to the US Dollar and inflation rose sharply. Interest rates rose too as the government tried to stabilise the currency. Turkey’s stock market lost 28% for UK-based investors last month.

But Turkey isn’t the only country feeling the effects of President Trump’s tariffs. The Chinese stock market also fell after a new round of tariffs was introduced on Chinese goods entering the US. That caused emerging markets to fall 2.5%.

The best performing market was the US, which rose 4.2%. UK and European markets lost money.

Where did HL’s ISA clients invest?

The list below shows the most popular funds (by number of trades) with HL’s Stocks and Shares ISA investors last month. It isn’t 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. Past performance is not a guide to future returns. 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. HL Multi-Manager Income & Growth Trust and HL Multi Manager Special Situations Trust are managed by our sister company HL Fund Managers Ltd.

Going against the herd

The UK has one of the world’s most unloved stock markets. Investors have pulled almost £10bn out of UK funds since the EU referendum just over two years ago. And most of it has been reinvested overseas.

But some investors bucked that trend last month, and we think they could be on to something.

Consumers will carry on buying goods like food, toothpaste or tobacco, and use other services, no matter what's going on with Brexit. So we’re confident lots of companies will still be able to make cash, just as they’ve done through difficult times in the past.

Below I look at three of last month’s most popular UK funds.

HL Multi-Manager Income & Growth

In-house experts Ellen Powley and Lee Gardhouse invest in a range of equity income funds with the aim to pay an attractive income and achieve capital growth over the long term.

They blend together fund managers who think differently from one another. That means they invest in different industries at different times. Some invest in higher-risk smaller companies with plenty of scope for future dividend growth, while others invest in large companies with well-established records of paying generous dividends. There are also a handful of overseas investments.

This approach has worked well since the fund launched in October 2002, and we think the results more than justify the extra costs of a multi-manager approach. The fund has risen 311%* since launch. It’s done better than the UK stock market as a whole, and better than the average UK equity income fund, though as always it’s important to note that past performance isn’t a guide to the future.

Annual percentage growth
Aug 13 -
Aug 14
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
HL Multi-Manager Income & Growth Trust 12.1% 5% 9.3% 9.5% 4.6%
FTSE All-Share 10.3% -2.3% 11.7% 14.3% 4.7%
IA UK Equity Income 9.9% 2.2% 9.5% 10.8% 4.1%

Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2018

LF Lindsell Train UK Equity

Nick Train brings investing back to basics. He looks for great companies, and holds onto them for the long term. The companies he invests in tend to have a unique position in their market that competitors would find hard to replicate. But exceptional companies aren’t easy to find. That’s why the fund invests in a small number of companies, which is a higher-risk approach.

The manager expects companies that own strong brands to perform well as global populations rise and increasing incomes fuel demand for UK brands from emerging markets. Unilever and Diageo are some of the fund’s biggest investments. They own hundreds of brands between them, which they sell around the world.

The manager also tries to benefit from the growing use of technology. He invests in companies that own or create media content or software used on digital devices like smartphones and tablets. This includes an investment in Daily Mail & General Trust, which owns the lucrative MailOnline news service.

The concentrated fund has performed exceptionally over the long term. An investment of £10,000 made ten years ago would now be worth £44,886*. The broader UK stock market returned £20,550 although that isn’t a guide to the future.

Annual percentage growth
Aug 13 -
Aug 14
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
LF Lindsell Train UK Equity 10.2% 9.1% 20.1% 16.1% 13.4%
FTSE All-Share 10.3% -2.3% 11.7% 14.3% 4.7%

Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2018

Marlborough UK Micro-Cap Growth

Unlike bigger businesses, smaller companies tend to be under-researched, which can leave plenty of opportunities for investors prepared to seek them out. The Marlborough UK Micro-Cap Growth Fund proved popular in August with our ISA clients.

The fund is managed by Giles Hargreave, who has an almost unparalleled record of investing in higher-risk smaller companies. He manages risk by investing in a wide variety of shares across a number of sectors, although the fund is currently focused towards technology businesses.

The fund has done exceptionally well since launch in 2004. It’s risen 733%* since then, significantly beating the broader market of UK smaller companies. We put this down to the managers’ ability to invest in companies with outstanding prospects.

We think the team at Marlborough have the skills and resources to deliver strong performance over the long term although there are no guarantees and past performance shouldn’t be seen as a guide to the future. Like all investments, this fund can fall as well as rise in value.

Annual percentage growth
Aug 13 -
Aug 14
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
Marlborough UK Micro-Cap Growth 24.9% 8.7% 10.5% 32.2% 12.5%
FTSE Small Cap 11.6% 5.6% 9.8% 20% 5.3%

Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2018

Three easy ways to buy funds in an ISA

It’s simple to open an ISA and buy funds with HL. Most of our clients choose to open their ISA online. Once you’ve read and are happy with the key features and terms and conditions (including tariff of charges), it typically takes less than five minutes to get started.

But if you’d prefer, you can also open your HL ISA by giving us a call or returning an application form by post.

As always, all stock market investments can fall as well as rise in value so you could get back less than you put in. Investments should be made for the long term (at least 5 years). Tax rules change and benefits depend on your individual circumstances.

  1. Apply online - get started in just 5 minutes
  2. Apply over the phone - call us on 0117 980 9950
  3. Apply by post - complete ISA application form
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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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