There were two new entrants to the top 10 ETF table in March as investors looked to capitalise on value opportunities.
Investors increased exposure to gold and UK mid-cap shares in the run-up to the tax year end. This is reflected in iShares Physical Gold ETC (LSE:SGLN) and Vanguard FTSE 250 ETF (LSE:VMIG) entering our top 10 most-bought exchange-traded fund (ETF) table in March.
The gold price hit a one-year high of $2,009 per ounce following banks once again making front-page news after the downfall of a couple of US lenders and European bank Credit Suisse (SIX:CSGN). This caused ripples across financial markets, leading investors to boost exposure to gold, one of a small number of safe-haven assets. Customers of interactive investor were part of this trend, with the iShares Physical Gold ETC the preferred route to gain exposure to the precious metal.
As discussed in the latest On The Money podcast episode, it is expected to be a mini-banking crisis rather than a new credit crisis. As explained in the podcast, one of the reasons for the turmoil has been interest rates rising rapidly over a short time period.
The other new entrant to the ETF top 10 table in March - the Vanguard FTSE 250 ETF – reflects the fact that some investors are seeking to take advantage of cheap valuations among domestically focused UK shares. In 2022, the FTSE 250 index declined by nearly 20%, as stagnant economic growth, high inflation and interest rate rises led investors to reduce risk, which caused share prices and valuations to slump for mid- and small-cap shares.
For the rest of the top 10, the long-term trend of investors preferring developed market passive exposure continued to play out.
- Active versus passive: the ultimate guide to investing your ISA
- Listen to our podcast: banking turmoil: why we’re in a mini crisis and not another global crash
- The risks of holding leveraged ETFs for more than one day
Topping the table is the iShares Core FTSE 100 ETF (LSE:CUKX), which knocked the Vanguard S&P 500 ETF (LSE:VUSD) (distributing) into second place. The accumulation share class of the Vanguard S&P 500 UCITS ETF (LSE:VUSA) also features, in 10th place.
Increased appetite for UK passive plays is further reflected in the Vanguard FTSE 100 ETF (LSE:VUKE) (distributing) moving up four places to third.
In fourth and fifth place are global passive strategies Vanguard FTSE All-World ETF (LSE:VWRL) and iShares Core MSCI World ETF (LSE:SWDA). Lower down the table, in eighth place, is the Vanguard FTSE All World High Dividend Yield ETF (LSE:VHYL).
Also in the top 10, in ninth place, is the WisdomTree NASDAQ 100 3x Daily Short ETP. Leveraged 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.
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.
Exiting the top 10 in March were the WisdomTree NASDAQ 100 3x Daily Leveraged Short ETP GBP (LSE:LQQS) and the WisdomTree FTSE 100 3x Daily Leveraged Short ETP (LSE:3UKS).
Top 10 most-bought ETFs in March 2023
|ETF||Change from February||One-year performance to 1 April 2023||Three-year performance to 1 April 2023|
|iShares Core FTSE 100 ETF||Up one||5||55.3|
|Vanguard S&P 500 ETF (Distributing)||Down one||-2.8||73.9|
|Vanguard FTSE 100 ETF (Distributing)||Up four||5||55.1|
|Vanguard FTSE All-World ETF||No change||-1.9||60|
|iShares Core MSCI World||Down two||-1.5||65.3|
|iShares Physical Gold ETC||New entry||8.4||22.9|
|Vanguard FTSE 250 ETF||New entry||-8.2||39|
|Vanguard FTSE All World High Dividend ETF||Up two||1.5||59.2|
|WisdomTree Nasdaq 100 3x Daily Short ETP||Down four||-2.2||-93.6|
|Vanguard S&P 500 ETF (Accumulation)||Down four||-2.8||73.9|
Source: FE FundInfo/interactive investor, 1 April 2023. Note: the top 10 is based on the number of “buys” during the month of February.
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