Interactive Investor

The top 10 most-purchased ETFs in July 2022

1st August 2022 12:53

Sam Benstead from interactive investor

American shares rose up the ranks as stock markets delivered strong returns last month.

Exchange-traded fund (ETF) investors embraced riskier assets in July, as stock markets rallied on signs that inflation is peaking and central banks will not raise interest rates as much as previously anticipated.

Among interactive investor customers, the tech-heavy US stock market was extremely popular, with the Vanguard S&P 500 UCITS ETF (distributing) the second most-bought ETF, Vanguard S&P 500 Ucits ETF (acc) rising three place to sixth, and Invesco EQQQ Nasdaq 100 Ucits ETF a new entry in tenth.

On top of that, the iShares CoreE MSCI World Ucits ETF, which has nearly 70% invested in America, rose one place to seventh place.

The tech-dominated Nasdaq Composite index rose 12.3% (in dollar terms) in July, while the S&P 500 added 9.1%. These marked the best monthly returns since 2020 as investors bet that interest rates would not have to rise to high to quell inflation. Lower interest rates increase the valuation of companies whose profits are likely to come in the future.

The other side of the optimistic, long US stocks trade is to sell gold. iShares Physical Gold ETC dropped five places to eighth place in July, even as gold was largely unchanged in price over the month.

Gold is viewed as a hedge against high inflation and sharp stock market declines, but has disappointed investors this year. Given that it pays no income, when interest rates rise owning gold becomes less appealing versus safe government bonds, which offer a higher yield.

Another theme in July was the use of leveraged ETFs to ramp up the stakes on how much the FTSE 100 index would rise or fall.

WisdomTree FTSE 100 3x Daily Leveraged Short was up seven places to third, while WisdomTree FTSE 100 3x Daily Leveraged Long was down four places to ninth. This shows that betting against the UK market was the more popular leveraged bet in July.

However, the FTSE 100 rose nearly 4% over the month, rewarding the optimists.

Investors should be careful here though, as although there are potential gains to be made, they could experience huge losses too. 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.

Simply tracking the returns of the UK’s blue-chip index remained a popular strategy, however. The most bought ETF continued to be the iShares Core FTSE 100 Ucits ETF, and Vanguard’s version was in fifth place.

Exiting the top 10 in July was iShares Oil & Gas Exploration & Production

Position ETF Change from June One-year return (%) Three year return (%)
1 iShares Core FTSE 100 Ucits ETF No change 8.8 7.5
2 Vanguard S&P 500 Ucits ETF (distribution) No change 8.6 43.2
3 WisdomTree FTSE 100 3x Daily Leveraged Short Up seven -31.2 -61.9
4 Vanguard FTSE All-world Ucits ETF No change 2.1 27
5 Vanguard FTSE 100 Ucits ETF Up one 8.7 7.4
6 Vanguard S&P 500 Ucits ETF (accumulation) Up three 8.6 43.2
7 iShares CORE MSCI World Ucits ETF Up one 3.8 31
8 iShares Physical Gold ETC Down five 9.9 23.6
9 WisdomTree FTSE 100 3x Daily Leveraged Long Down four 12 -26.9
10 Invesco EQQQ Nasdaq 100 Ucits ETF New entry -2.1 62.6

Source: Fe FundInfo, 31 July 2022.  Note: the top 10 is based on the number of “buys” during the month of July.

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