10 hottest ISA shares, funds and trusts: week ended 19 January 2024

With ISA season under way and tax year-end fast approaching, we look at the investments ii customers have been buying within their ISAs during the previous week. The data includes only real-time trades, not regular investing instructions, and combines the use of both existing funds and new money.

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Top 10 shares in ISAs

Investors went bargain hunting last week, picking up some of the FTSE 100’s biggest companies after significant share price declines.

Glencore (LSE:GLEN) shares fell 8% last week, making the miner one of the worst blue-chip performers after analysts at Deutsche Bank downgraded their rating from ‘buy’ to ‘hold’. However, the shares jumped six places in our top 10 most-bought to second spot.

The broker keeps its price target unchanged at 540p but blames its “tactical downgrade” on “several near-term earnings and strategy headwinds”. Among them are expectations that production guidance will be lowered at an update scheduled for 21 February. It’s also concerned about weak nickel, cobalt and coal prices, and that shareholder returns in 2024 will be limited to just the base dividend. “We continue to see medium-term value, but there are better near-term options for shareholder returns and cyclical leverage,” it said.

HSBC Holdings (LSE:HSBA) and Barclays (LSE:BARC) are new entries in our top 10. Both were down more than 3% and, again, analysts played their role. HSBC’s profit margin has been a beneficiary of high interest rates, but BNP Paribas worries about the negative impact when rates start to fall, which could hurt profits in 2025. Concerned investors also cite problems in the Chinese economy and real estate sector to which HSBC is exposed.

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Last week’s highest new entry was Diversified Energy Co (LSE:DEC) at number four, a company focused on the acquisition, production and retirement of natural gas assets in the United States. It’s share price has slumped 70% since August, down from 2,880p to just 875.5p. A decline in US gas prices and concerns in the US regarding its well retirement and emissions information have affected sentiment.

A week ago, the company said it “…notes the recent decline in its share price and confirms it is unaware of any operational or company-specific reason for this share price movement. The company further confirms there has been no material change to its financial and operational condition.”

It will issue a fourth-quarter and year-end 2023 trading statement “during the customary time frame at the end of this month”.

Diversified shares now offer the highest dividend yield on the UK stock market at 29.5%. However, despite impressive free cash flow, there are real concerns that the payout is unsustainable.

Despite the negativity, the stock does appear in one UK analysts list of income stocks for 2024. Peel Hunt said: “Like many in the market, 2023 was a tough year for Diversified’s shares. However, the fundamental cash flow generation ability of the asset base is undimmed, offering investors an incredibly attractive entry point into this high-quality company.”

ii Head of Editorial Lee Wild own shares in Diversified Energy Company.

Top 10 funds and trusts in ISAs

Jupiter India I Acc goes one better this week in taking top spot, having climbed six places to second a week ago. There are a couple of big trends at play here. One is that India’s stock market is enjoying a purple patch, with the country’s S&P BSE 100 index the best-performing major stock market since Covid.

Another factor at play is that some investors are preferring India over China, due to both political risk and the latter’s underwhelming stock market performance over the past couple of years. One prominent investor taking the stance is Carlos Hardenberg, fund manager of Mobius Investment Trust Ord (LSE:MMIT). He explains why he hardly has any exposure to China in our latest On The Money podcast episode.

The Jupiter India fund, run by Avinash Vazirani since 2008, looks to find small and medium-sized companies that are sometimes overlooked. 

In second place last week, having risen one place, is L&G Global Technology Index Trust. Just seven companies accounted for around two-thirds of the S&P 500’s 24% gain in 2023, as big tech led the market due to advances in artificial intelligence (AI) and expectations that interest rates had peaked. 

But rising share prices have brought more expensive valuations relative to profits, which increases the danger that investors today are overpaying for big tech. Many investors, however, are happy to pay up for higher valuations, with L&G Global Technology Index Trust the preferred route to the AI trend. It invests passively and holds five of the so-called Magnificent Seven: Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT), Alphabet Inc Class A (NASDAQ:GOOGL), NVIDIA Corp (NASDAQ:NVDA) and Meta Platforms Inc Class A (NASDAQ:META).

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One thing to bear in mind is that L&G Global Tech’s fortunes are reliant on the performance of Apple and Microsoft, as both have individual weightings of 18%.

Elsewhere, the biggest mover over the past week was City of London (LSE:CTY), advancing six places to fourth. This UK equity income trust is a favourite with investors, due to its dividend hero status (having raised payouts for 57 years in a row) and its longstanding fund manager Job Curtis, who has been at the helm since 1991. Curtis is viewed as a safe pair of hands because of his conservative investment approach.

Exiting the top 10 is star manager Terry Smith’s Fundsmith Equity fund and passive option Vanguard US Equity Index. 

Funds and trusts section written by ii’s Collectives Editor Kyle Caldwell.