Every month we look at the top funds to invest in and what investors are paying into.
In July, investors opted to spread their risk and go global, with a renewed sense of optimism on the back of pleasant surprises from the latest earnings season, according to data via fund supermarket interactive investor.
FTSE blue chips remained as popular as ever as investors sought to capitalise on attractive dividends from the likes of Vodafone, Legal & General and Aviva, while globally-exposed index funds proved a favourite among ii users.
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The positive sentiment came on the back of better-than-expected quarterly results, says Richard Hunter, ii’s head of markets.
“It is estimated that with around half of the current season now complete, around 80% of companies have beaten analyst expectations, even to the level of the mega-cap technology shares which have been major contributors to excess Nasdaq gains this year.”
Here’s a rundown of the most popular equities, funds and investment trusts in July.
The most popular funds July 2023
- Fundsmith Equity
- Royal London Short Term Money Market
- Vanguard LifeStrategy 80% Equity
- Legal & General Global Tech
- Vanguard US Equity Index
- Vanguard LifeStrategy 100% Equity
- Vanguard FTSE Global All Cap Index
- Fidelity Index World
- Vanguard FTSE Developed World Index
- Legal & General Global 100 Index Trust
Kyle Caldwell, collectives specialist at interactive investor, says investors are opting to spread risk by preferring global exposure.
“For funds, with the exception of Fundsmith Equity, investors are favouring index funds to invest in global equities, due to their low fees and the relative certainty of getting exactly what it says on the tin – broadly the return of the index that’s being mirrored. In our top 10 most-bought funds list for July there are six passive funds offering exposure to global shares, while specific exposure to global technology shares is also proving popular through L&G Global Technology Index Trust.
“Passive funds dominate the top 10 funds, with the only other active fund featuring being Royal London Short Term Money Market. The fund, which is the second most popular behind Fundsmith Equity, is attracting attention due to the rising interest rate environment. Investors like the low-risk nature of money market funds since the returns on their cash-like investments rise as interest rates increase,” he says.
The most popular investment trusts
- Scottish Mortgage (SMT)
- City of London (CTY)
- Greencoat UK Wind (UKW)
- Alliance Trust (ATST)
- F&C Investment Trust (FCIT)
- Polar Capital Tech (PCT)
- JP Morgan Global Growth (JGGI)
- Pershing Square Holdings (PSH)
- BlackRock World Mining (BRWM)
- Merchants Trust (MRCH)
The global trend as seen in the funds' space is also playing out among investment trusts, says Caldwell, with funds in this theme accounting for four of the top 10 most bought in July: Scottish Mortgage, Alliance Trust, F&C Investment Trust and JPMorgan Global Growth & Income. The latter is a new entry, however, it has featured in the top 10 in 2023.
But one investment trust that’s not been in the top 10 for some time and has returned is Pershing Square Holdings.
Caldwell says: “The trust, which last featured in the top 10 over two years ago, is managed by star investor Bill Ackman. Ackman is a value investor who looks for high-quality business with strong barriers to entry. He also puts hedging strategies in place to reduce risk or take advantage of opportunities.
“A recent trade that paid off handsomely was putting hedges in place when interest rates were low in the expectation that rates would rise significantly. As we now know, this has played out over the past 18 months or so. It's solid performance and big discount have been catching the eye of investors of late,” he adds.
The most popular equities for investors
- Tesla (TSLA)
- Lloyds Banking (LLOY)
- Legal & General (LGEN)
- Glencore (GLEN)
- easyJet (EZJ)
- RC365 Holding PLC (RCGH)
- Rolls Royce Holdings (RR)
- Aviva (AV)
- Vodafone Group (VOD)
- Microsoft (MSFT)
Victoria Scholar, head of investment at ii says the latest equities rankings show FTSE 100 stocks continue to dominate as investors scour for lucrative dividends.
“Vodafone, Legal & General and Aviva, which are all on this month’s list once again, boast annual yields of over 8%, appealing to investors on the hunt for income.
“Rolls Royce has returned to ii’s most popular stocks list in July. It has enjoyed a blockbuster run so far in 2023, topped off late last month by a 45% full-year operating profit upgrade, providing another boost for the engine maker and drawing more investors towards the stock,” she says.
A rebounding share price has seen Easyjet join the top the list despite not recovering to its pre-covid high.
“Despite this, the clouds are parting for the low-cost carrier which is predicting a record summer of profits thanks to increased ticket prices as well as the rebound in international travel over the seasonally crucial holiday season,” Scholar adds.
Tesla meanwhile has cemented its status as another mainstay of ii customer portfolios, maintaining its positioning on the list of most popular stocks this month.
“It has been one of the best performing stocks in the United States this year, rebounding with a vengeance after the ‘tech wreck’ of 2022. Its quarterly earnings report in July disappointed investors as profit margins suffered on the back of its price cutting strategy. Nonetheless this may have prompted investors to ‘buy the dip’ after shares pulled back following the release,” says Scholar.
Elsewhere, the hype around AI has not abated with Microsoft joining the list of most bought stocks this month. Its July earnings outlined aggressive AI spending plans, leading to a mini pullback which some eager investors sought to capitalise on. Despite that, the US tech giant has been “another standout stock market winner, so far, this year.”
But one stock that has certainly caught attention this month is RC365, enjoying a meteoric surge since the start of the year up over 500%, with its breathtaking gains prompting more ii investors to try to get in on the action.
Scholar says: “The payment gateway services company more than doubled revenues in the latest financial year while investors have been getting excited about its AI potential.”
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