A glance at two different lists of investors’ recent fund purchases throws up some interesting contrasts.
List A, from Barclays Stockbrokers Funds Market, suggests that investors are becoming more cautious. The most popular funds on the platform in 2007 were cash funds. Fidelity’s cash fund topped the table, with M&G’s High Interest fund in second place. In all money market funds accounted for nearly 40 per cent of the total invested through the Funds Market. There was also quite a lot of interest in bond funds, generally regarded as less risky than equity funds, and in equity income funds, often seen as a safer bet than out and out growth funds.
So the clear message is that investors are becoming more cautious, or are they? Included in the same top 20 table headed by cash funds are three China funds, three emerging markets funds and no fewer than five Asia Pacific funds. When these are added to the picture it appears that investors are not so much cautious as caught in two minds. Part of them is seeking a safe haven for their money while the other part is chasing some of the riskiest bets in the fund universe.
Meanwhile List B, detailing recent purchases on the Hargreaves Lansdown funds platform, is dominated by really high-octane funds such as emerging markets and natural resources funds. There are no fewer than three India funds, a China fund, three emerging Europe funds and two gold funds. There is not a single cash fund, no bond funds and just two equity income funds.
So why are the Hargreaves investors apparently so much more aggressive than the Barclays investors? A Hargeaves Lansdown spokesman thinks private investors may be buying the more exotic funds to top up their existing, more sedate portfolios. In other words they may already have their quota of plain vanilla UK equity funds and US and European funds and are seeking to add a little spice to their portfolio.
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But what about the Barclays investors? Are they just tacking a couple of defensive cash funds onto an existing, more aggressive portfolio? Fund groups must be hoping the answer to that question is yes, because the alternative explanation would be that they are making a broader move out of equities and into safer investments such as cash.