Recent years have seen positive past performance drive investor behaviour on the HL platform. It is not surprising that through 2023 and 2024, when the Mag 7 dominated global market returns, the most bought funds across all accounts were funds which had heavy biases towards these companies.
Tech trackers, US-heavy global equity funds and growth biased selections dominated the top 10 most bought for the 12 months from 1 July 2023. This introduced concentration risk to client portfolios however – and tests the momentum theory. To analyse the impact of this narrow trade, we looked at the most bought funds on the HL platform in the year up until June 2024 and then compared how they performed over the following 12 months. Do the most popular funds go on to be the best performing? Just four of the top ten were active funds, reflecting growing investor demand for passive exposure to the world’s major stock markets.
Three of the four active funds, Fundsmith Equity, Rathbone Global Opportunities, and Lindsell Train Global Equity, invest globally using a quality growth approach. The other, Jupiter India uses a GARP approach to investing in companies across the Indian stock market.
Over the year to the end of June 2025, just two of these funds outperformed – showing that popularity does not predict performance. The two that did deliver for clients were Rathbone Global Opportunities which rose in value by 7.55%, beating the 7.49% return from the MSCI World index, and Jupiter India, which delivered a return of 0.23%, ahead of the -6.16% return from the MSCI India index.
Fundsmith Equity and Lindsell Train Global Equity meanwhile underperformed the MSCI World index, delivering returns of -1.46% and 7.39% respectively.
So, mixed success. Just because a fund is popular with other investors doesn’t mean it will go on to outperform. A year is a short time over which to assess the skills of a fund manager though. Managers with different strengths, styles and areas of focus will perform differently over time.
When considering where to invest, it’s vital to look beyond the most popular funds, and consider the right assets and geographies – and the right balance – for your portfolio. It’s also important to take a long-term view. A one-year snapshot provides useful insight, but nobody should be investing for a single year – it’s something to consider when you have a time horizon of 5-10 years or more.
This was a volatile 12 months, with markets initially reacting positively to Donald Trump’s second term as US President. However, in April he surprised investors by announcing significant tariffs on some of the US’ closest trading partners around the world. After causing significant market turbulence, trade talks remain ongoing and policy uncertainty looks set to be a key theme over the year ahead.
By Joseph Hill, senior investment analyst, Hargreaves Lansdown
