They say fortune favours the brave and data from one of the UK’s biggest investment platforms suggests bold British investors have taken that maxim to heart. Last week we covered how British fund managers were ‘buying the dip’ provoked by the coronavirus to stock up on cut-price shares in companies with significant exposure to the Chinese economy. And stock broker and fund supermarket AJ Bell has said over the weekend that investors that use its platform seem to be taking a similar approach.
Over the past couple of weeks, AJ says that funds including the AGI Allianz China, which is 100% invested in Chinese industrial stocks, Stewart Investors Asia Pacific and GuardCap Emerging Markets have been among its most-bought funds. AGI Allianz China, which has returned 121% over the past 5 years, ahead of the 60% return delivered by the broader Chinese equities market, has seen particularly high new flows from AJ Bell investment account holders.
The Stewart fund has a broader Asian markets focus rather than being concentrated on China, with a third of its holdings based in India. But substantial exposure to Taiwan, Japan and Australia mean that many of its holdings have seen major coronavirus-inspired drops.
AJ Bell’s clients seem to particularly adventurous when it comes to international investment exposure. Globally-focused funds such as the Foresight Global Real Infrastructure and M&G Global Listed Infrastructure are also best sellers. Among its most bought-into trusts are Scottish Mortgage, Polar Capital Technology, Allianz Technology, Murray International, North American Income and Worldwide Healthcare – all of whom have international diversification.
Rebecca O’Keeffe of Interactive Investor, whose clients have also shown an increased appetite to diversify their portfolios internationally in recent years, commented for The Times newspaper:
“In times of volatility, it is the globally diversified investment trusts with clear strategies that investors often flock to — in the case of our platform, Alliance Trust, Scottish Mortgage and Murray International.
“What all three of these have in common is heritage: they have each been delivering returns for shareholders for well over a century, through economic boom and bust, wars — and, yes, some pandemics too, from the flu pandemic of 1889 through to Asian flu in the 1950s and beyond.”
Choice of investment platform seems to somehow reflect on the attitude and approach of investors. Clients of Hargreaves Lansdown’s investment platform, for example, seem on the whole to adopt a more risk averse approach. The company has said that among its most popular funds last week were the gold fund Investec Global Gold, Jupiter Strategic Bond and Fidelity MoneyBuilder Income, both bond funds, and the cash fund L&G cash. All four represent traditional ‘safe haven’ investments that Hargreaves investors clearly hope will offer wealth preservation qualities if things get worse.
Investors who are taking the bold approach of buying into funds with high levels of exposure to China and Asia at prices that are significantly down on where they were a few weeks ago are in good company. Warren Buffet, often dubbed the world’s most successful investor, and CEO of investment company Berkshire Hathaway, one of the largest public companies in the world, last week commented for CNBC:
“We’re buying businesses to own for 20 or 30 years. We buy them in whole, we buy them in parts, and we think the 20 and 30-year outlook is not changed by the coronavirus.”