Savers lose billions as UK’s 2 most popular Isa funds crash again

Together these massively popular funds have lost more than £14billion, in a brutal wipeout as global stock markets crash. Despite the carnage, experts are urging investors to stick with them.Terry Smith’s Fundsmith Equity Fund and the Scottish Mortgage Investment trust smashed almost every rival as stock markets rocketed in the wake of the financial crisis.Ordinary investors flocked to put money into these investment funds to share in their outsize success.Fundsmith Equity turned an investment of £10,000 into £58,380 in just 10 years, with a total return of more than 483 percent in that time. Scottish Mortgage did even better. At its peak it had returned 900 percent over a 10-year period.That would have turned £10,000 into a lucrative £100,000. Investors who bought these funds inside their Stocks and Shares Isa allowance would have taken those stellar returns free of income tax and capital gains tax.Yet now they will be nursing outsize losses instead of profits. Ordinary investors have poured money into Fundsmith Equity and Scottish Mortgage (Image: Getty)2022 has been tough for investors, with global stock markets crashing due to war in Ukraine, soaring inflation and rising interest rates.New York’s S&P500 index has fallen around 25 percent, while the Nasdaq Composite index of technology stocks is down 35 percent.That is a blow for both Fundsmith and Scottish Mortgage, because they invested up to three quarters of their money in the States.As we reported in the summer, they were hammered by the stock market crash in the first half of the year.They recovered some of their losses in the summer, when US stocks rallied. It didn’t last.Both funds fell again as the recovery petered out when investors released the US Federal Reserve will aggressively hike investment interest rates to curb inflation.Fundsmith has fallen 6.6 percent and Scottish Mortgage has dropped 14.4 percent over the last three months, figures from Trustnet show.Over 12 months, they are down 13.3 percent and 50.8 percent respectively. That’s a huge drop, especially for Scottish Mortgage, and has wiped billions off their value.READ MORE: ‘It’s falling’ – the best financial news this yearOne year ago, Terry Smith managed around £28billion. Today Fundsmith Equity’s value has dipped to £22billion. That’s a drop of a thumping £6billion.Scottish Mortgage’s assets under management plunged from more than £20billion to just £11.5billion over the same period, an even greater loss of £8.5billion. Combined, the two fund have lost £14.5billion in just 12 months. Yet investors should not rush to sell them, said James Yardley, senior research analyst at Chelsea Financial Services and FundCalibre.He is particularly positive about Fundsmith, which takes fewer risks than Scottish Mortgage and has not fallen as far.It tends to invest in established companies, such as Microsoft, Novo Nordisk, tobacco giant Philip Morris and L’Oriel, which have the resilience to withstand a recession.By contrast, Scottish Mortgage went big on high-risk tech stocks like Elon Musk’s Tesla. Shares in the electric car maker have crashed by more than half this year.DON’T MISS:Whisper it, but UK may avoid meltdown this winter as Sunak gets luc… [INSIGHT]Pension transfer values crash by £89,000 to ‘unprecedented low’ [LATEST]Facebook owner facing ‘terrifying losses’ as shares plunge [REVEAL] Plenty of other fund managers have found 2022 tough (Image: Getty)Yardley said: ‘Fundsmith is just six percent behind the global sector this year, which is not a disaster by any means. Especially after years of substantial outperformance.’It was inevitable that Terry Smith would have a bad year at some point, he added. ‘We are not concerned and it remains one of our preferred holdings for the long term.’Scottish Mortgage has had a much tougher time as tech stocks crash and investors take fewer chances with their money. ‘It has exposure to early-stage private companies and China, and takes on added risk by borrowing money to invest.’However, it could offer more upside when stock markets finally recover. ‘I think Scottish Mortgage can do well again over the long term but the journey may be bumpy. Only hold this trust as part of a well-diversified portfolio,’ Yardley added.Stock markets have performed well in the last week and Scottish Mortgage is now up 10.8 percent over the last month.Investors should only buy Stocks and Shares ISA funds for a minimum term of at least five years, and remember that past performance is no guide to future returns.