- Income was a key theme for the year across shares, investment trusts and funds
- Short-term bonds were particularly popular
It’s that time of the year. Everybody is looking back and taking 'stock' of what they have done, and what they need to change for the year ahead.
Investors are no exception, and in December brokers handily publish lists of the most popular investments among their customers over the year. Investors' Chronicle has compiled the lists and here's what we found out.
Stocks and shares
The list of top-10 most popular stocks on Hargreaves Lansdown, Interactive Investor, Fidelity and Bestinvest were remarkably similar. AJ Bell’s was slightly different only because it put individual bonds and stocks in the same basket, so fewer stocks made the list – but those that did were in line with what the other platforms have.
Legal & General (LGEN) was the most popular stock on Hargreaves Lansdown, Bestinvest and Fidelity, came second on Interactive Investor and third on AJ Bell. The financial services player’s share price has slumped for much of this year, but its juicy dividend yield attracted investors.
It wasn’t the only financial services company on the list, with Lloyds Banking Group (LLOY), Aviva (AV.), Barclays (BARC) and Phoenix Group (PHNX) also prominent. Laith Khalaf, head of investment analysis at AJ Bell, said that the UK insurance sector was "pretty beaten up and as a result is offering appealing levels of dividends, which are backed by fairly stable business models”. Other popular choices included Tesla (US:TSLA), mining company Glencore (GLEN), defence contractor BAE Systems (BAE), Vodafone (VOD), British American Tobacco (BATS) and Rolls-Royce (RR.).
Susannah Streeter, head of money and markets at Hargreaves Lansdown, noted investors were seeking out stocks that offered "potential for income and solid returns". There was some bargain hunting going on, with some of the big names having suffered this year,” she added.
Investment trusts
Fidelity, Interactive Investor and AJ Bell also published separate lists of the most popular investment trusts. Scottish Mortgage (SMT) still made the top of the list on Interactive Investor, but, perhaps unsurprisingly given its struggles over the past two years, did not make an appearance on the other two. This was partly because Interactive Investor bases its lists on the absolute number of “buys”, while the other two are net, and a lot of Scottish Mortgage investors have been selling.
Ed Monk, associate director for personal investing at Fidelity International, explained: “Figures for the biggest gross sales, excluding those selling the trust, show that Scottish Mortgage remains a popular choice for buyers, but the high number of redemptions means it does not feature among the best net-sellers.”
UK equity income trust City of London (CTY) came out on top on Fidelity and AJ Bell and second on Interactive Investor. The global equity giant F&C Investment Trust (FCIT) was a popular option, despite a less than stellar performance compared to its benchmark this year, as was JPMorgan Global Growth & Income (JGGI), whose flexible growth approach has made it by far the top performer in the Association of Investment Companies’ global equity income sector.
Renewable infrastructure play Greencoat UK Wind (UKW), with its inflation-linked dividend, also heavily featured. Other popular choices included the BlackRock World Mining Trust (BRWM), Alliance Trust (ATST), which was one of the best at navigating this year’s tech-focused rally, and Merchants Trust (MRCH).
Funds and bonds
On the subject of income, bonds were some of the most popular assets among private investors this year. Gilt purchases increased sevenfold on Interactive Investor in 2023, five different gilt issues were in AJ Bell’s top 10 list, and the Royal London Short Term Money Market Fund (GB00B8XYYQ86) was high up on all the lists of most popular funds.
Khalaf said that the fact that most bond buys were for short-dated ones suggests investors are using these as cash-like instruments. “After many years of near-zero interest rates, it’s perhaps no surprise to find some investors filling their boots given the yields on offer look far more appetising,” he noted.
Fundsmith Equity (GB00B41YBW71) was the most popular fund on Bestinvest and Interactive Investor, but investors generally favoured trackers for their equity exposure in 2023. Popular options included the Fidelity Index World Fund (GB00BJS8SJ34) and Vanguard’s Lifestrategy range.
This year’s rally was quite narrow and focused on tech stocks, which made it particularly hard for active managers to beat their benchmarks – but the popularity of passive investing has been increasing for a while. AJ Bell research found just 36 per cent of active managers beat the average passive alternative in 2023 across seven key equity sectors, up from 27 per cent in 2022.
