Investors continued to lose interest in gold-focused ETFs, while the UK remained popular.
The exchanged-traded fund (ETF) choices of interactive investor customers remained largely unchanged in July, compared to the previous month. While most of the ETFs in the top 10 most-bought list changed positions, no new ETF entered the rankings.
The most notable change was the decline in popularity of the iShares Physical Gold ETC (LSE:IGLN). Compared to previous months, the price of gold performed relatively well in July, making some small gains. Yet despite this, ETF investors appeared to lose some interest in the precious metal, with the ETF falling by six places.
Gold ETFs have steadily become less popular in recent months. Previously, in June, the iShares Gold ETF lost two places compared to May. Likewise, the WisdomTree Physical Gold (LSE:PHAU) lost its place in the rankings in June.
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UK investors continued to pour money into UK-focused ETFs in July. The iShares Core FTSE 100 ETF GBP Dist (LSE:ISF) kept its place as the most-bought ETF. Meanwhile, its rival, the Vanguard FTSE 100 UCITS ETF (LSE:VUKE) retained third place. Measured on a one-year basis, both FTSE 100-tracking ETFs have provided strong returns of 21.2%.
The UK’s main index was hit hard by last March’s sell-off. However, towards the end of the year performance picked up due to the prevalence of cyclical stocks in the index. On a three-year basis, however, performance is disappointing, with returns sitting at just 2.3%.
Creeping up the rankings in July was the WisdomTree FTSE 100 3x Daily Lvrgd ETP (LSE:3UKL). This ETF allows investors to gain triple the return (or losses) of the FTSE 100.
Leveraged ETFs are highly risky and should not be held for more than one day, as we have explained. While the ETF has provided a one-year return of 64.3%, on a one-year basis and on a three-year basis it has lost more than 30%. As noted above, ETFs tracking the FTSE 100 have seen roughly flat returns. However, due to the daily rebalancing of leveraged ETFs, this ETF has incurred large losses over that period.
The more domestic and mid-cap focused Vanguard FTSE 250 UCITS ETF (LSE:VMID) kept a place in the rankings, albeit two places below than where it had been in June. Performance for this ETF has been better than products tracking the FTSE 100 index, with its one-year performance at 37.5% and three-year returns at 17.6%.
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US shares remained popular, with the Vanguard S&P 500 UCITS ETF (LSE:VUSD) keeping its spot in second place. Over the past year, the S&P 500 has rebounded strongly, providing investors with a return of almost 30%. Also popular was Invesco EQQQ NASDAQ-100 ETF GBP (LSE:EQQQ), which climbed one place in the rankings. It has provided a return of 31.5% over the past year through tracking the tech-heavy Nasdaq 100 index.
The iShares Global Clean Energy ETF USD Dist GBP (LSE:INRG) proved slightly less popular than last month, moving down by one place. In 2020, the ETF started to rise in the most-bought list, at times topping it, as investors became increasingly attracted to the decarbonisation theme. On a three-year basis, the ETF has returned 142.8%.
Investors also continued to buy globally diversified ETFs, with both the Vanguard FTSE All-World UCITS ETF (LSE:VWRD) and the iShares Core MSCI World ETF USD Acc (LSE:IWDA) holding a place in the rankings. However, while the iShares version climbed two places, its Vanguard rival rose three places.
Top 10 most-purchased ETFs in July 2021
|Position||ETF||Change from June||1-year performance (%) to 1 August||3-year performance (%) to 1 August|
|1||iShares Core FTSE 100 ETF||No change||21.2||2.3|
|2||Vanguard S&P 500 ETF||No change||28.9||56.6|
|3||Vanguard FTSE 100 UCITS ETF||No change||21.2||2.1|
|4||WisdomTree FTSE 100 3x Daily Lvrgd ETP||Up 3||64.3||-32.1|
|5||Vanguard FTSE All-World UCITS ETF||Up 3||24.8||38.7|
|6||iShares Global Clean Energy||Down 1||47.6||142.8|
|7||iShares Core MSCI World ETF||Up 2||26.8||42.5|
|8||Vanguard FTSE 250 UCITS ETF||Down 2||37.5||17.6|
|9||Invesco EQQQ NASDAQ 100 ETF||Up 1||31.5||99.9|
|10||iShares Physical Gold ETC||Down 6||-12.7||40.2|
Source: interactive investor. Note: the top 10 is based on the number of “buys” during the month of July.
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