Which were the bestselling investments on interactive investor in 2022?

Global passive fund strategies dominate and investment trust investors look to capital preservation, income and global themes.

• Passive strategies account for eight out of the top 10 bestselling funds on interactive investor
• Global strategies account for seven out of the top 10 bestselling funds and six for investment trusts
• Scottish Mortgage tops investment trust bestsellers despite 41% dip in year-to-date performance

In what has been a difficult year for investments performance-wise, buffeted by financial challenges posed by red-hot inflation and rising interest rates, interactive investor customers have favoured passive funds, while going active with investment trusts, especially those with an income or capital preservation focus.

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Passive funds account for eight out of the top 10 bestselling funds on interactive investor, the UK’s second-largest direct-to-consumer investment platform. Six of which are from Vanguard’s stable, Vanguard LifeStrategy 80% Equity ranking highest in second position ahead of the 100% Equityand 60% Equity variant in second and third positions, respectively.

Fundsmith Equity tops the funds list - one of only two actively manage strategies to rank, the other being Baillie Gifford American in ninth position.

When it comes to investment trusts, there was an appetite for income-focused strategies, which accounted for two out of the top 10 best best buys, with City of London (LSE:CTY) ranking highest (second position), ahead of Greencoat UK Wind (LSE:UKW) (fourth position). And in these uncertain times, global mandates from three of Britain’s oldest ‘dividend hero’ investment trusts were in demand, with Scottish Mortgage (LSE:SMT) still rooted at the top and F&C(LSE:FCIT)ineighth position and Alliance Trust (LSE:ATST)t in 10th.

The prevailing theme for 2022 was global, with global strategies accounting for seven out of 10 funds bestsellers and six of the top 10 most-bought investment trusts.

There was also some appetite to the UK, with City of London, Greencoat UK Wind ranking within the top 10 investment trust bestsellers, while Vanguard FTSE UK Equity Income was the sole UK-focused fund to make the cut.

Investment trusts with a capital preservation theme were in the top 10, namely Super 60 rated Capital Gearing Ord (LSE:CGT) (fifth place) and Ruffer (LSE:RICA) (seventh place).

Kyle Caldwell, Collectives Specialist, interactive investor, says: “Over the past year, there’s been three key trends that investors have been tapping into: passive strategies and income-producing funds and investment trusts, and capital preservation.

“The first trend is reflected by eight of the top 10 most-bought funds in 2022 investing passively. The increased demand for passive strategies reflects scepticism over the ability of fund managers to add value when stock markets are volatile. Usually, one would expect choppy markets to play into the hands of active funds, due to their ability to make changes to portfolios. However, some investors are clearly unconvinced.

“The greater demand for income strategies is shown through City of London, Greencoat UK Wind appearing in the top 10 most-bought investment trusts. 

“Given how volatile markets have been this year, combined with the backdrop of inflation being at its highest levels in decades, the increased appeal of income-focused strategies makes sense. After all, providing income is paid, dividends give investors a tangible return.

“City of London and Greencoat UK Wind have weathered the stock market storm in 2022, with their share price returns notably above their respective sector averages. They both have high yields, of around 5%.

“While dividend heroes owing to their long histories of raising their dividend each year, F&C and Alliance Trust have lower yields, 1.5% and 2.5%. They have also held up well this year versus their peers. Both are multi-manager trusts offering a one-shop stop for investing.”

Equities

Looking at the most-bought equities among ii customers this year (to 13 December 2022), UK banking giant Lloyds Banking Group (LSE:LLOY) tops the list, ahead of aerospace firmRolls-Royce Holdings (LSE:RR.) and US electric vehicle company Tesla (NASDAQ:TSLA).

There is also some evidence suggesting that investors leant on the stock market volatility stocked by the Russia-Ukraine conflict, with Russian-oriented miner, Polymetal International (LSE:POLY)ranking among the bestselling equities.

Commenting on the bestselling equities, Keith Bowman, Investment Analyst, interactive investor, says: “Despite rising interest rates, dividend yields remain a high priority for investors, with sectors such as banks and life assurers offering income attraction.

“Despite concerns for the housing market, a dividend yield of over 4% has seen big mortgage provider Lloyds remain a favourite, while the added investment banking exposure brought by Barclays (LSE:BARC) sees it also favoured. 

“Challenges in the pension arena aside, a yield of over 6% has left insurer Legal & General Group (LSE:LGEN) in the eye of investors. The Ukraine war and its impact on the oil price left oil major BP (LSE:BP.) being courted, while exposure to battery materials and their potential positive impact on climate change sees Glencore (LSE:GLEN) a mining sector favourite.

“Similarly, Tesla and its head start on rivals in the electric car arena is still raising interest with investors, while aircraft engine maker Rolls Royce and its emergence from the pandemic remains closely watched.

“A recovery from the pandemic also stays central at British Airways owner, International Consolidated Airlines Group SA (LSE:IAG), in generating investor interest, while Polymetal International is a story of Russian mining assets and the impact of the war in Ukraine.

“Finally, shares for retailer Boohoo Group (LSE:BOO) have suffered given rising costs and a more challenging consumer outlook, with investors hoping that its investment in initiatives such as overseas distribution can help restore the share price to former glories.” 

Top 10 most-bought investments on interactive investor in 2022 (to 13 December 2022)