Most-bought investments: December 2023

Fundsmith Equity dropped further down the list of most-bought funds on interactive investor in December 2023, as passive and income strategies continued to take centre stage.

While it was still the most-bought fund on the platform for the whole year, the £22.7 billion global equities fund, led by Terry Smith, was in fourth place in our top 10 rankings for December, down from second place the month prior. It has been beaten to the top spot by Royal London Short Term Money Market in recent times, which maintained poll position for the third month in a row. 

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Tracker fund L&G Global Technology Index moved up one place to second, ahead of another passive strategy Vanguard LifeStrategy 80% Equity in third position – one of five funds from the Vanguard stable that makes the top 10. In all, passive strategies accounted for seven of the top 10 fund bestsellers in December. Global funds accounted for the same number.

Kyle Caldwell, Collectives Editor at interactive investor, says: "Although Fundsmith Equity has slipped down our fund bestsellers' table since it was knocked off the top spot in October, what has not changed is that Fundsmith Equity remains very popular with our customers. Smith focuses on high-quality companies, meaning firms with established businesses, reliable profits and steady growth, which should also be able to withstand an economic downturn.

“The fund at the top of the charts – Royal London Short Term Money Market – has significantly risen up the rankings over the past year. The rising interest rate environment has fuelled the demand, turbocharging Royal London Short Term Money Market’s yield, which is currently just over 5%. In addition, many investors have become more cautious, which has benefited this low-risk fund. Money market funds own a diversified basket of very low-risk bonds that are due to mature soon, normally in under a year. As a result, investors can earn an income on their cash with minimal risk.”

Income strategies dominate investment trust bestsellers

Income strategies continue to dominate in the investment trust space, with all but two of the top 10 investment trusts paying a dividend, but two having small yields – Scottish Mortgage (LSE:SMT) and Pershing Square Holdings GBP (LSE:PSH). The other six have yields ranging between 2.26% (3i Group Ord (LSE:III)) to 6.86% (BlackRock World Mining Trust (LSE:BRWM)) at the time of writing.

Unchanged at the top of the list of bestselling investment trusts is Scottish Mortgage. It was briefly knocked off the top spot in October (having previously been the most-bought trust each month since June 2019), but in November it returned to the summit.

Kyle Calwell says: “Arguably the  biggest investment theme of 2023 was technology shares returning to form, particularly the US giants, including Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT). Share prices were boosted by excitement around the potential for artificial intelligence (AI) to disrupt various industries. 

“Time will tell whether this theme has staying power in 2024 and beyond, but many investors are hoping that will be the case, with Polar Capital Technology Trust (LSE:PCT) returning to the top 10 most-bought investment trust table in December, and L&G Global Technology Index fund moving up the rankings on the fund side.

“It is a similar story with India, which has been one of emerging markets' strongest performers in recent history off the back of strong economic growth. The continued presence of Jupiter India and India Capital Growth (LSE:IGC) on our top 10 list of fund and investment trust bestsellers shows this theme is holding strong.”

Direct equities

Commenting on the most-bought equities on ii in December, Richard Hunter, Head of Markets, interactive investor, says: “Petrofac Ltd (LSE:PFC) came into the cross hairs of bargain hunters in December, becoming the second-most bought equity in the month. The share price, which has fallen by 54% over the last year, languished despite the company announcing a £1.1. billion deal with a Dutch company (the shares had been down by 76% before recovering slightly on the news) following fears over the company’s financial stability and the possible need to sell off assets.

“Elsewhere, Rolls-Royce Holdings (LSE:RR.) topped the leaderboard once more, as investors continued to ride the wave of its successful turnaround plan. The shares, which jumped by a stellar 210% during 2023, received a warm market welcome having announced the disposal of non-core assets, while shifting towards higher margin and higher growth potential offerings. At the same time, the return to near normality in the airline industry meant that the company could recoup some of its previous losses, since it is partly paid for its engines on hours flown.

“Glencore (LSE:GLEN) also continued its momentum as a favoured stock choice after its recent deal with Teck Resources, while the bargain hunters also sought Anglo American (LSE:AAL) after a difficult year which saw the shares plunge by 40%, most latterly on disappointing spending and production guidance for the next two years.”

Top 10 most-bought investments on interactive investor in December 2023

Source: interactive investor.

Most-bought investments on interactive investor in 2023

Source: interactive investor 

Review investments in the new year

Kyle Caldwell says: “The end of a year and the start of a new one is a good time for investors to take stock by reviewing how investments have been performing over both the short and long term. 

Reviewing your portfolio a couple of times a year is, like other tidy-up jobs, not one that investors are likely to look forward to. But it is necessary, and an important part of the review is making some adjustments to restore the balance of your portfolio. Doing so maintains the level of investment risk the portfolio aimed to achieve when it was first put together. 

“Failure to rebalance could result in an investor taking on more risk than they desired and possibly not achieving their financial objectives.

“In a nutshell, rebalancing involves taking a look at your winners and converting some of those paper gains into real profits. Some of the proceeds could then be reinvested into areas of the portfolio that have been underperforming, but may soon recover their poise.

“With any investment, it is worth trying to put to the back of your mind its recent performance and ask yourself: would I invest in this today? Consider whether the performance drivers are sustainable going forward, particularly in the case of a theme, investment style or country hitting a purple patch.”