- Passive funds dominate the most popular fund list with AJ Bell retail investors this year
- Investors increasingly want no-fuss exposure at a low-cost
- One money market fund has shot up the rankings
Dan Coatsworth, head of markets at AJ Bell, comments:
“Interest in passive funds soared in 2025, judging by AJ Bell DIY investor preferences.
“Tracker funds and ETFs (exchange-traded funds) dominated the list of most popular funds as investors sought convenience and lower costs. Rather than pay more for active management in the hope of outperformance, they’ve gone for the cheaper option to simply track the market.
“Active managers hoping to keep investors on board and attract new ones are going to have to work their magic in 2026, otherwise the big migration to passive will gather pace.
“The growth in popularity of passive funds is plain to see. Only three out of the top 10 most popular funds, ETFs and investment trusts among AJ Bell DIY investors this year were active products.
“Of those three, two have passive products under the bonnet, being the Vanguard LifeStrategy 80% Equity and 100% Equity funds. They are only considered active funds because Vanguard is making active decisions about asset allocation, but it uses passive funds to get market exposure.”
Passive funds
“The most popular passive funds were ones providing broad access to companies around the world, exposure to gold, a specific focus on the technology sector, and to the UK and US markets.
“Casting your net wide is an easy way to put your money to work in an ISA or pension.
“Tracking a global equities benchmark is a simple and low-cost way to invest. It’s like buying an assorted box of biscuits. Rather than spending ages in the supermarket choosing which brand or product type to buy, you just put the collection in your basket and get a multitude of different tastes and flavours.
“A lot of people have a passive global equities fund as the backbone for a portfolio, with popular funds HSBC FTSE All World, Fidelity Index World, Vanguard FTSE Global All Cap Index and Vanguard FTSE All World all doing a similar job for investors. They track a specific basket of global shares – if the value of that basket (or index) goes up by a certain amount in a month, the funds should do the same minus any fees.”
Active funds
“Vanguard’s LifeStrategy fund range was a hit with investors in 2025. The most popular fund from this range was the version split into 80% shares and 20% bonds. Vanguard’s managers decide where in the world to invest the money on the shares side, and in which type of bonds for the fixed income side.
“It’s also noteworthy that a money market fund appears high up the list of active fund preferences for DIY investors. This fund category aims to deliver a return just above cash, suggesting some caution among investors or a preference to blend some lower-risk investments with higher-risk ones in a portfolio.
“Fundsmith Equity managed to keep a space in the top 10 most popular active funds, despite ongoing underperformance, while Artemis Global Income caught investors’ attention in a year when some people’s appetite for US exposure started to wane. The Artemis Global Income fund has much lower exposure to the US than the broader global stock market, and that was precisely what many individuals sought for their portfolios.”
Investment trusts
“Against a backdrop of activist investor disruption, mergers, manager changes and managed wind-downs, investment trusts still struck a chord with certain people.
“The most popular trusts with AJ Bell DIY investors included stalwarts like City of London. But JPMorgan Global Growth & Income took the top spot even though its performance has lagged the market this year, returning 2.6% versus 14.6% from the MSCI All Countries World index in pounds*.
“Notably, JPMorgan Global Growth & Income has traded at a discount to the value of its underlying assets since the summer, having previously been at a premium. It adopted a more cautious tone earlier this year, which might have surprised some investors who thought the investment trust was a permabull.”
*Source: FE Fundinfo, 1 January 2025 to 2 December 2025 total return.
