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Think twice before following the funds rush

A return to 'risk-on' might cause portfolio niggles
Think twice before following the funds rushPublished on June 6, 2024

With equity markets looking strong this year there's plenty of temptation to jump onto some of the trades with the most momentum. There are certainly enough options out there: many of the Magnificent Seven stocks have posted handsome returns so far this year, niche markets such as India have been doing well and even the FTSE 100 is enjoying a rich run of form. But, as ever, investors might want to avoid getting too carried away.

Higher bond yields created huge opportunities for income investors last year, provided they didn't pile too heavily into that asset class at the expense of capital and dividend growth over time.

They certainly have moved into bonds (both directly and via funds) in the past year or so to capture the yields on offer, but there are some small signs of that reversing. Hargreaves Lansdown notes that all of the 10 most popular funds amongst its Isa customers in May were equity vehicles, with the likes of US and global trackers topping the charts alongside Jupiter India (GB00B4TZHH95) and Artemis Global Income (GB00B5N99561).

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