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Most popular ISA funds in August

Dominic Rowles looks at some of the most popular funds with HL ISA clients last month.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Investors had to contend with a cocktail of uncertainty in August – from trade tensions between the US and China, to Brexit and other political instability in Europe. Global stock markets were volatile and most lost money over the month. Hong Kong's stock market was one of the worst performers as civil unrest gripped the country.

Meanwhile bond markets did well on the whole. In the US, the yield curve inverted, meaning investors were in the unusual situation where they would accept lower returns for lending over a longer period than a shorter one. It means they expect lower economic growth and interest rates in future.

Where did HL clients invest?

The list below shows the most popular funds (by net purchases) with HL 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. The HL Select funds are managed by our sister company Hargreaves Lansdown Fund Managers Ltd.

Below we look at three of August's most popular funds in more detail.

Royal London Sterling Extra Yield Bond

With interest rates near record-low levels, some investors looked to bond markets for better returns. The Royal London Sterling Extra Yield Bond Fund is the only one investing in bonds to make it into the list.

Eric Holt and his team invest in a wide range of bonds issued by companies across lots of industries. It means the fund doesn't depend on a single area. They also look in areas overlooked by other investors.

We think this fund is an excellent choice for a high income from corporate bonds. It currently yields 5.4% although this is variable and not a reliable indicator of future returns. It’s a more adventurous option as it invests in high yield bonds, which are higher risk.

That’s why this fund might not do so well in an economic downturn. But we’re impressed with the manager’s long-term performance. He’s delivered a much greater return than his peers since launch in September 2003.

Please note as this is an offshore fund you are not normally entitled to compensation through the UK Financial Services Compensation Scheme.

Annual percentage growth
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
Aug 18 -
Aug 19
Royal London Sterling Extra Yield Bond 0.9% 8.1% 12.8% 4.8% 4.6%
IA Strategic Bond 1.0% 7.7% 3.2% -0.3% 6.5%

Past performance is not a guide to the future. Source: Lipper IM to 31/08/2019

More on Royal London Sterling Extra Yield Bond

LF Lindsell Train UK Equity

Nick Train has managed the LF Lindsell Train UK Equity Fund since launch in July 2006.

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. This, combined with the fund's investments in smaller companies, adds risk.

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 fund's performed exceptionally over the long term. An investment of £10,000 made ten years ago would now be worth £48,787*. The broader UK stock market returned £22,484 although that isn’t a guide to the future.

Annual percentage growth
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
Aug 18 -
Aug 19
LF Lindsell Train UK Equity 9.4% 20.4% 16.3% 13.6% 14.1%
FTSE All-Share -2.3% 11.7% 14.3% 4.7% 0.4%

Past performance is not a guide to the future. Source: *Lipper IM to 31/08/2019

More on LF Lindsell Train UK Equity

Legal & General International Index

Global funds were exceptionally popular in August and it's easy to see why. With Brexit on the horizon and no clarity on whether a deal with the EU will be agreed, buying a fund that’s invested globally is an attractive idea.

The Legal & General International Index Fund tracks the FTSE World (excluding UK) Index and invests in more than 2,300 companies across the US, Japan, Europe, Asia and higher-risk emerging markets. The annual charge is an exceptionally low 0.08%. Our annual charge of up to 0.45% to hold funds also applies.

The fund's successfully tracked its index since launch in March 2008, losing little value to annual charges. We think it’s a great choice to complement a UK-focused portfolio, or as a first step to investing overseas.

Annual percentage growth
Aug 14 -
Aug 15
Aug 15 -
Aug 16
Aug 16 -
Aug 17
Aug 17 -
Aug 18
Aug 18 -
Aug 19
Legal & General International Index 2.5% 25.3% 18.1% 11.1% 6.3%
FTSE World ex UK 2.9% 27.6% 19.9% 12.1% 7.4%

Past performance is not a guide to the future. Source: Lipper IM to 31/08/2019

More on Legal & General International Index

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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