Most-bought investments: May 2024

• Nvidia takes the top spot of most-bought equities in May
• Fundsmith Equity dropped to fifth place, overtaken by Royal London Short Term Money Market, L&G Global Technology Index, and Jupiter India
• Commodities asset class has seen the biggest jump (up 184%) in net inflows among ii customers on a year-on-year basis
• Net flows into Fixed Income spike 91% over the same period.

interactive investor, the UK’s second-largest platform for private clients, reveals the bestselling funds, investment trusts, equities and net inflows changes into popular asset classes among its customers in May 2024.

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Fundsmith Equity, usually firmly at the top of the most-bought list of funds on ii, slipped to fifth place in May - with Royal London Short Term Money Market, L&G Global Technology Index, and Jupiter Indiaovertaking.

Investors sought specific trends with their investments in May: such as low-risk bond market exposure, US tech exposure, and growth potential in India. In addition, renewable energy trusts surged, despite previous hesitancy due to rising interest rates.

Meanwhile, technology investment trusts lost their shine; with Polar Capital Technology and Allianz Technology exiting the top 10 in May.

Below, interactive investor’s experts explore May 2024’s most-bought data in more depth.

Funds and investment trusts 

Commenting on the most-bought funds and trusts on ii in May, Kyle Caldwell, Funds and Investment Education Editor at interactive investor, says: “Fundsmith Equity was bumped down from second to fifth place in the rankings for May. Terry Smith remains popular with our customers, but investors are looking to take advantage of more specific trends and opportunities.

“In the case of Royal London Short Term Money Market, investors are looking to pocket a distribution yield of 5.2% from an area of the bond market that is low risk.

“L&G Global Technology Index offers plenty of exposure to the US technology giants that have been the immediate beneficiaries of investor excitement around the potential of artificial intelligence.

“While, Jupiter India offers exposure to a fast-growing economy that has favourable demographics, including a young population. India’s stock market has enjoyed a good spell of performance over the past couple of years, and investors buying today will be hoping the purple patch continues. In addition, India’s election looks set to deliver a resounding win for market-friendly Narendra Modi, potentially boosting sentiment further.

“Another trend this month saw the renewable energy infrastructure sector attract the attention of investment trust bargain hunters. In May, the sector accounted for two of the three new entrants to our top 10 most-bought investment trust table: NextEnergy Solar Ord (LSE:NESF) Fund and Gore Street Energy Storage Fund Ord (LSE:GSF).

“Since interest rates started rising in late 2021, investors have been shunning the renewable energy infrastructure sector. Those rate rises have caused a re-pricing of valuations, which has harmed share prices. At the same time that interest rates rise, so do bond yields. As a result, income seekers now have more options and can take less risk as the safest types of bonds, UK and US government bonds, now offer yields of around 4% compared to virtually nothing when interest rates were at rock-bottom levels.

“However, it appears that some investors are now attempting to ‘buy low’ in the hope that a recovery will play out. At the same time share prices have been selling off investment trust discounts have also been widening. With big discounts and big yields on offer, those investors buying today could argue they are being paid to wait for a change in fortunes. In terms of potential tailwinds, interest cuts would in theory be a positive, as this would likely cause bond yields to fall.

“As the spotlight shines on one sector, it has dimmed on another. Technology duo Polar Capital Technology and Allianz Technology departed the top 10, alongside Pershing Square Holdings, which invests in a small number of US companies.”

Equities  

Commenting on the most-bought direct equities in May, Victoria Scholar, Head of Investment, interactive investor, says: “Household names on the FTSE 100 such as Vodafone Group (LSE:VOD), Rolls-Royce Holdings (LSE:RR.) and Lloyds Banking Group (LSE:LLOY) retained their spots on the list of most-bought stocks on the interactive investor platform in May. Commodity stocks have proven popular among ii investors in May with BP (LSE:BP.) and Glencore (LSE:GLEN) new additions to the list of most-bought stocks.

“A rights issue at National Grid (LSE:NG.) caused its share price to slide, prompting opportunistic buyers to snap up the FTSE 100 listed energy infrastructure firm at a discount, landing the stock on the most bought list last month.

“Similarly, easyJet (LSE:EZJ) scored a position on the top 10 leaderboard of popular stocks on the ii platform in May after a major sell-off in shares of the low-cost carrier. In fact, easyJet was the worst performer on the entire FTSE 100 last month, plunging over 14%, prompting value investors to make the most of a potential buying opportunity. Its CEO Johan Lundgren announced plans to step down in May, and shares are still sharply below pre-pandemic levels with its recovery lagging rivals despite strong summer holiday travel demand.

“Ocado Group (LSE:OCDO) could be set to drop out of the FTSE 100 after six years, but that hasn’t stopped ii investors from buying up shares in May, with the stock staging a tentative rebound last month, attempting to claw back some of its share price declines since the 2020 highs. Despite the slight pick-up in May, shares are still down by almost 50% so far this year.

“In the United States, while AI stock market darling NVIDIA Corp (NASDAQ:NVDA) retained its spot, the usually very popular electric vehicle giant Tesla Inc (NASDAQ:TSLA) has dropped off, with its appeal among investors fading on the back of a near 30% slide in its share price this year. In contract, Nvidia is up almost 130% year-to-date.”

Most-bought investments on interactive investor (ii) in May 2024

Shifting net inflows into popular asset classes among ii customers

Net inflows into popular asset classes on interactive investor. Data sourced to 31 May 2024.

Analysis of net inflows – after withdrawals have been factored in - for different asset classes from interactive investor customers shows that Commodities has seen the biggest jump (up 184%) in net inflows on a year-on-year basis (to 31 May 2024). Meanwhile, net flows into Fixed Income jumped 91% over the same period.

Flows into Alternatives and Property investments have gone from a net outflow to a net inflow over the period. Meanwhile, Equity remains the most popular asset class among ii customers, although inflows into equities are down 17% year on year.

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: "The data offers an insight into how investors are proactively investing their cash in the ever-evolving investment landscape.

“The asset class that has seen the biggest uptick in popularity among our customers is Commodities, with heightened geopolitical tensions and cautious outlooks from central banks supporting the price of precious metals and oil in particular. This asset has served as a helpful geopolitical hedge, and the outlook for it appears favourable given the possibility that interest rates in developed countries have peaked and will likely be cut this year.

“The reprieve in bond yields, following the return to a higher interest rate environment, has also captured our investors’ attention, with inflows into Fixed Income investments almost doubling year-on-year. 

“Flows into Alternatives and Property investments have gone from positive to negative over the past year. Both asset classes have underperformed in recent history. Alternative assets are supposed to offer valuable diversification to an investment portfolio during periods of high stock market volatility, but they haven’t really been delivering the returns they typically promise. For example, the average fund in the IA Infrastructure sector was up only 1.1% in the year to the end of May.

“Meanwhile, structural changes following the Covid-19 pandemic, including a more prevalent remote working and online shopping culture, has resulted in a shift in fortune for the sector. Valuations among both assets are attractive, and the transition from net outflows to net inflows underscores a faith that the situation will improve.”