Interactive Investor

The top 10 most-purchased ETFs in May 2022

1st June 2022 12:44

Sam Benstead from interactive investor

Investors have been increasing risk on hopes that inflation has peaked in America. 

Investors dialled up their risk appetite in May, buying leveraged exchange-traded funds (ETFs) tracking the FTSE 100 and Nasdaq indices as stock markets flattened out after brutal selling in April.

The WisdomTree Nasdaq 100 3x Daily Leveraged ETF was a new entry in third place in the top 10 most-bought ETFs, as was the WisdomTree FTSE 100 3x Daily Leveraged ETF in eighth place. These leveraged ETFs use derivatives to amplify gains – and losses – by three times.

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, our article below explains why in more detail. 

Another risk-on trade was taken by investors buying the Invesco EQQQ Nasdaq 100 Ucits ETF, which entered the most-bought list in May at number seven. It owns a who’s who of American technology stocks, from Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT) to Airbnb (NASDAQ:ABNB) and NVIDIA (NASDAQ:NVDA).

Stock markets were broadly flat in May as inflation fell slightly in the US, prompting some investors to conclude that the worst of the price rises was over, and that a recession may now be the biggest risk to markets. Counterintuitively, a slowdown in growth may be good for stocks, as inflation pressures could ease further, and central banks may step in to stimulate the economy.

The top two ETFs switched places in May, with the Vanguard S&P 500 UCITS ETF (LSE:VUSD) (distributing) regaining the top spot and theiShares Core FTSE 100 ETF (LSE:ISF) falling to second place. Investors use these “core” ETFs to cheaply track the US and British stock markets. The Vanguard S&P 500 Ucits ETF (accumulating) was the ninth most-bought ETF.

Other core holdings were the Vanguard FTSE All-World UCITS ETF (LSE:VWRD) in fourth place and the iShares Core MSCI World ETF (LSE:IWDA) in sixth. They track global shares for around 0.2% in fees.

The iShares Physical Gold ETC (LSE:IGLN) retained its fifth-place ranking. Investors typically own gold to hedge against rising inflation. The price of gold fell from around $1,900 an ounce to $1,830 during May.

Another new entry, in 10th place, was the iShares Oil & Gas Exploration & Production ETF (LSE:IOGP). It owns small oil and gas companies involved in drilling. Shares in the ETF have risen more than 50% this year and rose 13% last month as the oil price increased from $105 to $115 a barrel.

Dropping off the most-bought list were a host of UK market trackers: the Vanguard FTSE 250 Ucits ETF, the Vanguard FTSE 100 Ucits ETF, and the iShares UK Dividend Ucits ETF. As investors embraced more risk, they ditched cheaper UK shares valued for their dividends in favour of faster-growing American stocks.

Top 10 most-popular ETFs May 2022

Position ETF Change from April One-year performance to 31 May 2022 (%) Three-year performance to 31 May 2022 (%)
1 Vanguard S&P 500 Ucits ETF (distributing) Up one 12.2 56.5
2 iShares Core FTSE 100 Ucits ETF Down one 11.9 17.8
3 WisdomTree Nasdaq 100 3x Daily Leveraged ETF New entry -26.2 167.1
4 Vanguard FTSE All-World Ucits ETF Up three 5.1 39.3
5 iShares Physical Gold ETC No change 9.2 12.1
6 iShares Core MSCI World Ucits ETF No change 7.4 43.8
7 Invesco EQQQ Nasdaq 100 Ucits ETF New entry 4.5 79.6
8 WisdomTree FTSE 100 3x Daily Leveraged New entry 28.5 1.5
9 Vanguard S&P 500 Ucits ETF (accumulating) Up one 12.2 56.5
10 iShares Oil & Gas Exploration and Production Ucits ETF New entry 103.2 79.9

Performance figures: FE fundinfo. Note: the top 10 is based on the number of “buys” during the month of May. 

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.

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