ISA season: trades up 14% year-on-year, with India, tech and income among bestsellers
Myron Jobson examines what interactive investor customers have been buying.
26th March 2024 14:32
by Myron Jobson from interactive investor
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- interactive investor’s trading volumes up 14% year-on-year this ISA season
- Buys in Helium One and Nvidia up 2,323% and 521% year-on-year, respectively
- Scottish Mortgage remains popular, as £1billion buyback programme excites investors
- interactive investor tax year end offers:
- Open an ii SIPP by 5 April and get £200 cashback. New customers only. View offer
- Open an ISA or a Trading Account before 5 April and get £50 of free trades. View offer
As the new tax year edges nearer, customers of interactive investor (ii), the UK’s second-largest investment platform for private clients, have been active in making the most of their ISA allowance before it resets on 6 April.
It has been a busy ISA season, with trading volumes on ii up 14% year-on-year for the period covering 1 January to 25 March 2024.
- Invest with ii: Open a Stocks & Shares ISA | ISA Investment Ideas | Transfer a Stocks & Shares ISA
Over the period, ii ISA customers have favoured investments that often appear on our monthly bestsellers list, with passive and income strategies taking centre stage. However, there is also evidence of an adventurousness in investment choices that reflect prevailing investment themes at present.
Tech has made a comeback amid excitement over the potential of artificial intelligence to transform various industries. L&G Global Technology Index, Polar Capital Technology Ord (LSE:PCT), NVIDIA Corp (NASDAQ:NVDA) and Tesla Inc (NASDAQ:TSLA), have proven popular among ii’s ISA customers for exposure to the sector.
Jupiter Indiaand India Capital Growth Ord (LSE:IGC) have climbed up the bestsellers table recently on the back of strong economic growth in the region.
Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “In what has been a volatile period for investments, stoked by a myriad of challenges from inflation, high interest rates and geopolitical tensions, passive funds and those with a global remit have proved popular among our ISA customers.
“Passive funds account for seven out of the top 10 bestselling funds on interactive investor since the start of the 2023-24 tax year. Four are from Vanguard’s stable, with Vanguard LifeStrategy 80% Equity ranking highest in third position.
“Fundsmith Equity tops the funds list - one of only three actively managed strategies to rank among the top 10. Royal London Short Term Money Market Fund has significantly risen up the rankings over the past year, largely as a result of the rise in interest rates that have turbocharged its yield.
“Appetite for direct exposure to the Indian market has spiked in recent history, reflected by the rise of Jupiter India fund and India Capital Growth up our bestsellers list. Improved sentiment to the region has coincided with strong economic growth throughout the year - with the latest economic reading showing that India’s GDP grew to 8.4% in Q4 2023 - and the progression of the investor friendly Business Reform Action Plan, announced back in 2022.
“Income is another prevailing theme, with investors seeking to benefit from rising yields following the return of the high interest rate environment. The desire among many investors to protect their portfolios against inflation has also contributed to high demand for income strategies. This is best reflected in our most bought investment trusts list. Seven of the top 10 most-bought investment trusts pay a dividend, but two have small yields – Scottish Mortgage Ord (LSE:SMT) and Pershing Square Holdings Ord GBP (LSE:PSH).”
Scottish Mortgage’s £1billion buyback programme excites investors
Myron Jobson says: “Scottish Mortgage remains an industry stalwart with a large number of investors continuing to hold their conviction for the strategy. There is appreciation among advocates of the investment trust that it’s recent underperformance is not down to bad stock selection.
“Instead, it has been driven by a shift in the macroeconomic environment, which has seen interest rates sharply rise in an attempt to cool inflation. This has, in turn, depressed the valuation of growth companies because they’re often leveraged with high levels of debt to fuel growth. As a portfolio with a heavy focus on growth companies, Scottish Mortgage has felt the brunt of this. But expectations of a fall in interest rates fuelled a rally in the trust’s share price at the tail end of 2023 – something investors hope marks a turnaround in fortune.
“The share buyback programme is an attempt by the trust’s board to narrow the trust’s sizeable discount, which stood at 15% to its net asset value prior to the announcement. By reducing the number of shares for investors to buy, the disparity between supply and demand decreases. This is expected to reduce the trust’s discount, benefiting shareholders as the share price would rise closer to the underlying value of the trust’s investments.”
Most-bought shares
Lee Wild, Head of Equity Strategy, interactive investor, says: Income stocks have remained a popular choice over the past year, especially the ones paying dividends way in excess of rates offered by savings accounts. Insurers Legal & General Group (LSE:LGEN) and Aviva (LSE:AV.) are among the most generous blue-chips, yielding around 8%. Even Lloyds Banking Group (LSE:LLOY), a long-term favourite stock to trade, now offers a 6% yield plus capital upside potential as the sector benefits from the current high interest rate environment.
“Investors have been happy to back the turnaround at Vodafone after several years of pain, although it’s been a struggle up to now as the relatively new CEO tries to win over the City. It’s no surprise to see the Rolls-Royce Holdings (LSE:RR.) fan club continues to grow. The company has done everything it promised, and more; the only difficulty owning these shares has been knowing when to sell. Those who hung on have been rewarded in spades.
“Tesla’s woes have triggered a 30% slump in the share price in 2024, but investors have used it as an opportunity to pick up stock at prices not seen for almost a year. Concerns about short-term demand for electric vehicles have affected sentiment, but some of Tesla’s longer-term projects like AI and robotics are potentially more lucrative than autos.
“Smallest company in the top 10 by far is Helium One Global Ltd Ordinary Shares (LSE:HE1), but it’s delivered some of the biggest gains, if only temporarily. A long-awaited announcement on a hydrogen drilling programme in Tanzania triggered a share price peak of 3.7p for a stock that had been trading below 0.2p two weeks earlier, a gain of 1,750%. They’ve come off the boil since but continue to attract interest from investors with a big appetite for risk.”
Most-bought investments among adult ISA customers from this year so far (from 1 January to 25 March 2024)
Position | Fund | Investment trust | Equity |
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10 |
Source: interactive investor
interactive investor’s tax year end deadlines
- Bed & ISA/JISA instructions – Deadline 4.30pm, Thursday 28 March*****
- New ISA applications – Deadline - 11.30pm, Friday 5th April*
- New JISA applications – Deadline -11.30pm, Friday 5th April*
- Add money to your ISA/JISA by debit card – Deadline - 11.30pm, Friday 5th April**
- Add money to your ISA/JISA by internal transfer - Deadline - 11.30pm, Friday 5th April***
- Add money to your ISA/JISA by bank transfer – Deadline - 11.59pm, Thursday 4th April****
interactive investor tax year end offers
- Open an ii SIPP by 5 April and get £200 cashback. New customers only. View offer.
- Open an ISA or a Trading Account before 5 April and get £50 of free trades. View offer.
Last-minute ISA inspiration webinar with Merryn Somerset Webb
Recently, ii hosted a webinar with leading financial journalist Merryn Somerset Webb and a panel of interactive investor experts on some last-minute ISA inspiration.
They shared their ISA picks across the equities, bonds, and funds/trusts space and explored the importance of portfolio diversification.
The webinar can be found on ii’s Lunchtime Live page, here.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
Please remember, investment value can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a stocks & shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.