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How global is your UK fund?

When it comes to UK equity funds, investors are generally aware that the market they pick stocks from can be pretty international in flavour. But they should also bear in mind a tendency of some fund managers to dabble in markets beyond their main remit. Investment Association sector criteria generally allow open-ended regional equity funds to put up to a fifth of their assets into overseas shares, while the rules can be somewhat looser for investment trusts.

This means that if you buy a fund focused on the UK or another specific region, you may be getting a little of other markets too. This isn’t necessarily a bad thing: it can allow a manager to play trends or sectors not easily accessible in their own market, for example. But it’s worth being aware of so you can monitor your underlying holdings and overall portfolio asset allocation.

When it comes to UK funds, I recently mentioned Liontrust Income (GB0032325093) holding Visa (US:V) and Microsoft (US:MSFT) in the absence of exciting tech exposure closer to home, and the fund is not alone here. City of London Investment Trust (CTY) manager Job Curtis has, for example, held the likes of Microsoft. More recently, the team behind Royal London Sustainable Leaders Trust (GB00B887YV76) initiated a position in a popular tech-related stock Taiwan Semiconductor Manufacturing Company (TAI:2330). They argued that demand for semiconductors was “set to only increase over the longer term, driven by trends such as the electrification of vehicles and increasing sophistication of consumer electronics”. The fund had 16.2 per cent of its assets in overseas shares at the end of March.

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