Most-bought investments: April 2023

Investors look to money market funds, income strategies, and old investment trust favourites.

• Four new entrants to the most-bought equities list in April: TUI, THG, Kodal Minerals, and Rio Tinto
• Fundsmith Equity is joined by one other active fund pick in April; Royal London Short Term Money Market
• Investment trusts: old global favourites remain popular with investors

interactive investor, the UK’s second-largest investment platform for private investors, outlines the most-bought investments on its platform in April 2023.

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Passive funds and the Vanguard LifeStrategy range, which use passive strategies, continue to dominate. But in April an actively managed money market fund, Royal London Short Term Money Market, currently yielding around 4%, also made the top 10.Higher interest rates have knock-on effects for bond yields as well as savings accounts, sending them higher, and ii has seen much greater interest in bonds and cash equivalents over the past several months.   

When it comes to investment trust top buys, investors are focusing on income, from alternative energy-style trusts such as Greencoat UK Wind (LSE:UKW) and Henderson Far East Income (LSE:HFEL), through to UK income favourites City of London (LSE:CTY) and Merchants Trust (LSE:MRCH).

But investors are also going global for income, via Murray International (LSE:MYI) and JPMorgan Global Growth & Income (LSE:JGGI). Meanwhile, Scottish Mortgage (LSE:SMT), F&C (LSE:FCIT), and Alliance Trust (LSE:ATST), which count among the UK’s oldest and largest global trusts and have been powering portfolios for generations, are also proving popular.

Below, ii looks at what was catching private investors’ eyes over the month of April across not only equities, but also investment trusts and open-ended funds.

Direct equities in detail

Victoria Scholar, Head of Investment, interactiveinvestor, explains: “FTSE 100 heavyweights such as Barclays (LSE:BARC), Lloyds Banking Group (LSE:LLOY), Legal & General Group (LSE:LGEN), and Glencore (LSE:GLEN)continue to dominate the list of most popular stocks on the ii platform in April. Vodafone Group (LSE:VOD), which fell out the top 10 in March, reclaimed its spot on the list, with shares enjoying solid gains across the month.

“Tesla (NASDAQ:TSLA)once again features in the list, jumping up the rankings in April despite reporting disappointing first-quarter results. After shares in the electric vehicle surged in the first quarter of 2023, its share price has been declining over the last month, prompting opportunistic Tesla bulls to pounce on this stock at a discount.

“After HSBC Holdings (LSE:HSBA)’s acquisition of Silicon Valley Bank in March, the lender found itself among the most popular stocks on the ii platform last month. However, in April, HSBC has dropped out again along with Rolls-Royce Holdings (LSE:RR.), BP (LSE:BP.) and Aviva (LSE:AV.). Shares in BP were little changed in April before falling sharply this morning after it pared back its share buyback programme despite bumper profits.

“London-listed e-commerce group, THG Ordinary Share (LSE:THG), was a new addition to the most popular list of ii stocks in April amid hopes of a takeover following an approach from US private equity giant Apollo, which lifted shares by over 40% in a single session. THG, the group behind LookFantastic and Myprotein, has had a tough time during its lifespan as a public company with shares falling sharply since its IPO in September 2020. Even CEO and chair Matt Moulding admitted going public had ‘sucked’.

“TUI AG (LSE:TUI),Kodal Minerals (LSE:KOD) and Rio Tinto (LSE:RIO) were other new additions to the list of best buys in April. Kodal Minerals shares have skyrocketed this year after a series of positive developments including a major deal with a Chinese miner. Shares are up over 200% since the start of 2023.”

Funds and investment trusts in detail

Commenting on the most-bought funds and trusts on ii during the month of April, Kyle Caldwell, Collectives Specialist, interactive investor, says: “Central bank interest rate rises mean that investors can finally get a good return on their cash, which in turn has increased the potential returns on offer from money market funds. Investors have been moving to take advantage, reflected by the increased popularity of Royal London Short Term Money Market, which was a new entry to our top 10 most-bought active funds in April. The fund, which has a low annual fee of 0.1%, has a yield of 4%. The fund invests in short duration bonds that are set to mature soon. Bond yields have risen notably in response to interest rate rises, offering investors the highest level of income in over a decade.

“Investors have also been eyeing up income among investment trusts, reflected by JPMorgan Global Growth & Income and Henderson Far East Income entering the top 10 table in April.

“JPMorgan Global Growth & Income has a yield of 3.8%. It adopts a total return approach, aiming to outperform the MSCI All Country World Index over the long term. For Henderson Far East Income, a high and growing dividend is the main focus, reflected by its eye-catching yield of 9.5%. 

“Income-paying investment trusts have a particular attraction for investors who want a regular cash flow, because they don't have to distribute all the income generated by their assets every year. Investment trusts can hold back up to 15% each year, which means they can build up a ‘rainy day’ reserve to bolster dividend pay-outs in leaner years. In contrast, open-ended funds have to return to investors all the income generated each year.

“For many investors, particularly those at retirement, the consistency of a rising dividend is to be treasured. Therefore, it is no surprise to see City of London, F&C Investment Trust, and Alliance Trust, all remaining popular with investors. Each are among the eight investment trusts with more than half a century of annual pay rises. Of the trio, City of London is more of an income play, with a yield of 5%, whereas Alliance Trust and F&C have more of a capital growth focus, reflected by their lower yields of 2.5% and 1.5%.

“Elsewhere, investors are being drawn to the high yields on offer by other dividend-paying investment trusts. BlackRock World Mining Trust (LSE:BRWM), yielding 6.2%, leads the pack, followed by yields of 5.6%, 4.8%, 4.2% for Greencoat UK Wind, Merchants, and Murray International.

The outlier is Scottish Mortgage, which continues to be the most-popular investment trust among our customers. The trust has a high-growth focus, although it does pay a small dividend.

“The types of companies that Scottish Mortgage invests in are growth companies with disruptive technologies, including a third of the portfolio in more speculative unlisted companies - have been firmly out of favour for the past 12 to 18 months. This is due to interest rate rises, which have devalued the expected future earnings of growth companies.”

Top 10 most-bought investments on interactive investor in April 2023