interactive investor customers sought to tap initial rises in UK, US and global stock indices last month.
Stock markets paused their march higher in February, as investors began once again to worry about inflation and higher interest rates.
For the month, the FTSE All-Share finished 1.5% higher, while the MSCI World and S&P 500 index of America’s largest companies were flat after rising about 5% by the middle of the month.
Exchange-traded fund (ETF) investors on the interactive investor platform added to core tracker funds for US, UK and global stock markets in February in a bid to capture index returns.
The biggest moves were the Vanguard S&P 500 Ucits ETF (accumulating) rising three places from ninth to sixth in our most-bought table, and the iShares Core MSCI World Ucits ETF (accumulating) rising from fifth to third place.
Meanwhile, the Vanguard FTSE All-World Ucits ETF fell one place to fourth.
The two global ETFs have subtle differences. The iShares ETF, from BlackRock, excludes emerging markets. It therefore has no China exposure and owns around 1,500 stocks, costing 0.2% in fees a year.
Vanguard’s global ETF is an “all world” tracker and includes emerging markets. It owns around 3,750 shares, with 3% invested in China. It costs 0.22% a year in fees.
- The top 10 most-purchased ETFs in January 2023
- The top 10 most-purchased ETFs in December 2022
- The risks of holding leveraged ETFs for more than one day
The most-popular ETFs were unchanged in February: the Vanguard S&P 500 Ucits ETF (distributing) and the iShares Core FTSE 100 Ucits ETF. They track the largest US and UK shares for just 0.07% in fees and are generally used as core allocations in a portfolio.
Customers also bought leveraged ETFs in February. The WisdomTree Nasdaq 100 3x Daily Leveraged was up one place to fifth, while the WisdomTree FTSE 100 3x Daily Leveraged Short fell four places to eighth place, and the WisdomTree Nasdaq 100 Daily Leveraged Short rose one place to ninth.
- Benstead on Bonds: where to find the best yields in 2023
- 12 funds to generate £10,000 of income in 2023
These ETFs use financial contracts to amplify the gains – and losses – of a stock market. They are therefore much riskier than normal ETFs, and investors should do their homework before buying one of them.
The promotional literature of many leveraged products specifies that they should not be held for more than one day, and our article explains why in more detail.
The iShares Physical Gold ETC fell off the most-bought list in February
|Position||ETF||Cange from January||One-year performance to 1 March 2023(%)||Three-year performance to 1 March 2023 (%)|
|1||Vanguard S&P 500 Ucits ETF (distributing)||No change||3||49|
|2||iShares Core FTSE 100 Ucits ETF||No change||10.4||33.3|
|3||iShares Core MSCI World Ucits ETF||Up two||3.8||41.7|
|4||Vanguard FTSE All-World Ucits ETF||Down one||2.8||37.1|
|5||WisdomTree Nasdaq 100 3x Daily Leveraged||Up one||-52.1||26|
|6||Vanguard S&P 500 Ucits ETF (accumlating)||Up three||3||49|
|7||Vanguard FTSE 100 Ucits ETF (distributing)||New entry||10.4||33.1|
|8||WisdomTree FTSE 100 3x Daily Leveraged Short||Down four||-29.2||-78.8|
|9||WisdomTree Nasdaq 100 Daily Leveraged Short||Up one||7.1||-92.9|
|10||Vanguard FTSE All World High Dividend Yield||Down two||8.9||37.2|
Source: Fe FundInfo/interactive investor, 1 March 2023. Note: the top 10 is based on the number of “buys” during the month of February.
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.
Peter Spiller: ‘embarrassing’ discount will close soon and reward long-term investors