Passive funds are winning the popularity contest as Cavendish Online reveals more than half of the nine most bought funds were index trackers

 
Lucy White
Active Passive funds
Five passive funds were in Cavendish's most-bought for the first half (Source: Getty)

For the first time ever, as many passive as active investment funds featured in Cavendish Online's ten most-bought funds in the first half of this year, the online broker has revealed.

Of the five index tracking funds which featured, one more than in the same period last year, four were from Vanguard.

However the most-bought fund was the ISA Cash Park, which allows investors to move their money between stocks and shares and cash, followed by the actively managed Fundsmith Equity Fund.

“Passive funds feature heavily in the top 10, with three of Vanguard’s LifeStrategy funds as well as their FTSE Developed World ex UK fund proving just how popular low cost trackers have become,” said Mike Green, Cavendish Online's Investment Service Manager.

Read more: Where to put your money? These are the most popular fund platforms for investors in the UK

Most-bought funds on Cavendish Online in the first half of 2017
ISA Cash Park
Fundsmith Equity Fund
Vanguard LifeStrategy 80% Equity
Vanguard FTSE Developed World ex UK Equity Index
CF Woodford Income Focus Fund
Vanguard LifeStrategy 100% Equity
Vanguard LifeStrategy 60% Equity
Jupiter India Fund
Lindsell Train Global Equity Fund
Fidelity Index UK

The five passive funds were also higher up the popularity list, ranking in third, fourth, sixth, seventh and tenth place.

Neil Woodford's new fund, the CF Woodford Income Focus Fund which launched in April, has become the fifth most popular fund amongst Cavendish Online investors so far this year.

However, his original Equity Income Fund was less popular, and ranked as the second most ditched fund behind the Invesco Perpetual High Income.

Read more: Top 20 most consistently performing investment companies over the last decade revealed

Most ditched funds on Cavendish Online in the first half of 2017
Invesco Perpetual High Income
CF Woodford Equity Income Fund
AXA Framlington Biotech Fund

Standard Life Investments Global Absolute Return Strategy

Henderson UK Property PAIF Feeder
Neptune UK Mid Cap
Standard Life Investments UK Smaller Companies
JP Morgan US Smaller Companies Fund
Invesco Perpetual Distribution
Marlborough Multi Cap Income Fund

The active versus passive fund debate has been raging ever-more intently, as the Financial Conduct Authority (FCA) implied last year that it did not see the value in the higher fees charged by many active managers.

“There has been an increase in the popularity of passive funds, which often happens when markets rise, and of course passives can be very cost effective,” said Annabel Brodie-Smith of the Association of Investment Companies.

“However, the performance for UK active funds has significantly picked up post-Brexit. Investors looking at active funds may want to consider investment companies which have strong long-term performance and income advantages.

“Our research for the FCA review of competition in the asset management industry demonstrated that, over the medium and long term, investment companies outperform their benchmark far more regularly than open-ended funds.”

Read more: As ETFs become ever more popular, where is the active v passive debate now?

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