Keeping an eye on what other investors are doing can be a great way to generate investment ideas. With that in mind, today I’m going to highlight the top 10 investment funds that Hargreaves Lansdown investors bought for their Stocks and Shares ISAs last month.
You may be surprised at some of the funds on the list.
Hargreaves Lansdown investors bought these funds
The top 10 funds Hargreaves Lansdown clients bought for their ISAs in August (in alphabetical order) were:
Baillie Gifford American
Baillie Gifford European
Baillie Gifford Global Discovery
Baillie Gifford Long Term Global Growth
Baillie Gifford Managed
Baillie Gifford Positive Change
Legal & General Global Technology Index
LF Blue Whale Growth
Rathbone Global Opportunities
The thing that stands out about this list is that Hargreaves Lansdown investors are diversifying into international shares. This is great news. The UK has many world-class companies. But to fully diversify your portfolio, you need to have exposure to international shares too.
Traditionally, UK investors mainly stuck to the UK stock market when investing in shares. This is known as investing with a ‘home bias’. However, it seems that Hargreaves Lansdown investors are not making this mistake. This list of funds suggests that they are thinking globally, which is a very smart move.
Secondly, technology is a dominant theme here. Most of these funds have high weightings to the tech sector. Baillie Gifford American, for example, had 28.3% weighting to the tech sector at 31 July. Its top holdings include Shopify, Tesla, and Amazon.
The Legal & General Global Technology Index is a low-cost index fund that tracks technology companies in the FTSE World index. Personally, I see this fund as a slightly riskier way to play the technology theme. That’s because around 30% of the fund is allocated to just two stocks – Apple and Microsoft. This means there’s a higher level of stock-specific risk. Having some exposure to technology in your portfolio, however, is a wise move.
Another observation is that there’s a sustainable fund in the mix – the Baillie Gifford Positive Change fund. This fund aims to invest in companies that are contributing towards a more sustainable and inclusive world. I’ve commented before that interest in sustainable investing has increased significantly in recent years.
In the past, many sustainable funds underperformed the broader market. However, today, plenty of sustainable funds are delivering fantastic returns for investors. This particular fund has returned 67% over the last year according to Hargreaves Lansdown, which is a phenomenal return.
Finally, it’s good to see some under-the-radar funds, such as Blue Whale Growth, on the list. This is a fantastic little fund that has delivered excellent returns for investors since its launch just over three years ago. Over the last 12 months, it has returned 24.3% according to Hargreaves Lansdown, comfortably beating some of its bigger rivals such as Fundsmith (13.7%) and Lindsell Train Global Equity (1.6%).
The takeaway here, if you invest in actively-managed funds, is that diversifying your portfolio across a number of different funds with different investment styles can pay off. Not only can it potentially enhance your returns but it can also potentially lower your overall portfolio risk.
Edward Sheldon owns shares in Hargreaves Lansdown, Apple and Microsoft, and has positions in Fundsmith Equity and Blue Whale GrowthJohn Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Apple, Microsoft, Shopify, and Tesla. The Motley Fool UK has recommended Hargreaves Lansdown and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.