interactive investor, the UK’s second largest investment platform for private investors, outlines the most bought investments on its platform in May 2023.
Passive funds and the Vanguard LifeStrategy range, which use passive strategies, continue to dominate. Only two actively managed funds remain in the top 10 – Fundsmith Equity, a long-term favourite among ii investors, and Royal London Short Term Money Market, which made the top ten in April and has held on to its spot in May.
In investment trust land, income remains the aim of the game – particularly high yields. However, we saw a similar theme in the equities space, too, with investors turning towards higher-yielding stocks.
Commenting on the most bought equities in May, Richard Hunter, Head of Markets, interactive investor, explains: “May was a tough month for the FTSE100, with its exposure to overseas stocks proving to be something of a double-edged sword. Concerns over US debt ceiling negotiations, inflation, further potential interest rate hikes from the Federal Reserve which could prompt recession and a faltering Chinese economic recovery, all added to a month in which the premier index lost 4.2%.
“The best buys on our list for May showed an element of investor entrenchment, with a notable focus on highly-yielding dividend stocks, such as Vodafone (10.1%), Legal & General (8.5%), Rio Tinto (8.3%), Aviva, and Glencore (both 7.9%). Such yields are still well in excess of cash equivalents, and provide the additional option for investors, if they wish, of reinvesting the dividends, thus benefiting from the power of compound interest over time.
“Equally, there was the usual speculative mix of potential recovery situations. ASOS shares have declined by 36% in the year to date leading to its demotion from the FTSE250, insurers Avivaand Legal & General have dropped by 11% and 9% respectively, while Vodafone (as with Aviva and Legal & General) also gives both dividend yield and recovery possibilities, having lost 11% so far this year.
“The continuing strength within the holiday sector continued to be positive for the airlines, and indeed Rolls-Royce, which is paid for its engines on a continued basis on hours flown. Investors chose to ride the coattails of a stock which has seen an increase of 47% so far in 2023.
“Tesla has also been a star performer in the year to date, as have many US tech stocks where the Nasdaq index has added 24% and eliminated some of its losses from last year. The likes of Tesla have made a contribution to this turnaround, and an increase in the share price of 89% so far this year has resulted in its being a firm favourite among interactive investor customers.”
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