Most-bought investments: August 2024

• Fundsmith Equity leaves the top 10 for the first time since 2018, when ii began tracking its most-bought investments
• Market darling Nvidia holds the top spot for equities, despite a fall in share price in August
• Tesla exits the top 10 list following disappointing Q2 2024 earnings

interactive investor, the UK’s second-largest platform for private investors, reveals its most-bought equities, funds and investment trusts in August 2024.

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For the first time since ii began tracking its most-bought investments in 2018, Fundsmith Equity has left the top 10, as manager Terry Smith faces the headwinds of global stock market returns being heavily influenced by a small number of US technology companies – similar to many other fund managers.

Passive funds also continue to be popular with ii’s investors, and Vanguard take five of the top 10 slots. The only active funds that made it into the top 10 in August were the Royal London Short Term Money Market and Jupiter India.

August was a volatile month for equities, and in the midst of this was NVIDIA Corp (NASDAQ:NVDA), which reported its latest quarterly update in August. Despite beating expectations, the volatility caused a fall in the share price. Investors, however, remained undeterred – with the US market darling retaining its number one spot.

Tesla Inc (NASDAQ:TSLA)’s disappointing Q2 2024 earnings saw the EV giant drop off the top 10 list entirely for August – despite holding third place in July.

Amazon.com Inc (NASDAQ:AMZN) and HSBC Holdings (LSE:HSBA)also entered the list in August, while easyJet (LSE:EZJ) dropped off.

Below, interactive investor’s experts explore August 2024’s most-bought data in more depth.

Funds and investment trusts

Commenting on the most-bought funds and trusts on ii in August, Kyle Caldwell, funds and investment education editor at interactive investor, says: “We’ve been tracking the most-bought funds and investment trusts among our customers since the start of 2018, and this is the first time Fundsmith Equity has not made the top 10. It has had an incredible run featuring every single month, and long-term investors of the fund will surely have no complaints as it has comfortably outperformed the wider global market and the vast majority of global fund rivals since launch in November 2010. However, performance has lagged global markets over the past couple of years.

“Fundsmith Equity manager Terry Smith, like other professional investors, is continuing to face into the headwind of global stock market returns being heavily influenced by a small number of US technology companies. 

“Many investors are positioning themselves for technology shares to continue their fine form. L&G Global Technology Index retains its place as the most-bought fund. It has large positions, just over 40% of the fund, in Apple Inc (NASDAQ:AAPL), Microsoft Corp (NASDAQ:MSFT) and Nvidia. Therefore, holding this fund could spell trouble for investors who are overexposed to technology should there be a sharp correction.

“Also proving popular among investment trusts are Polar Capital Technology Ord (LSE:PCT) and Allianz Technology Trust Ord (LSE:ATT). The biggest US technology shares have been on a strong run of performance over the past decade, barring 2022 when share prices came off the boil due to interest rate rises. However, since the start of 2023 share prices have accelerated again due to investor excitement over the potential for artificial intelligence (AI) to disrupt various industries. 

"Most actively managed US and global funds tend to hold less than the wider market in the US tech giants. One reason is because portfolio concentration rules prohibit funds from holding more than 10% in a single stock. Such rules are in place to ensure funds are sufficiently diversified, which helps to reduce risk. 

“In contrast, index funds and exchange-traded funds (ETFs) can hold a higher percentage. For index funds, 20% of assets can be held in a single stock, which can rise to 35% in exceptional market conditions. For ETFs, the same 20% rule applies, but some put their own rules in place to cap each constituent at a certain level, such as 10%.”

Equities

Commenting on the most-bought direct equities in August, Richard Hunter, Head of Markets at interactive investor, says: “August started shakily and ended strongly, providing some buying opportunities as the month progressed either to add to holdings or to buy on the dip, and ii customers took full advantage.

“At the centre of the volatility was the US market darling Nvidia, which not only was at the centre of a technology tempest but also reported its latest quarterly update which, despite beating expectations, resulted in a fall in the share price. However, this was not enough to deter investors – for ii the stock remains top of the most-bought table for the second month in a row. The shares ended up 11% in August and are ahead by 148% in this year alone.

“A similar opportunity saw Amazon, another of the “Magnificent Seven”, in investors’ sights and the stock entered the top 10 most bought. The share price rise has been far less spectacular than that of Nvidia, but Amazon nonetheless rose by 6% in August and are up by 19% this year.

“In the UK, the usual suspects were seen in abundance. Rolls-Royce Holdings (LSE:RR.) remains well regarded by investors, adding another 7% in the month to now register a gain of 66% so far this year, while there was also a strong presence of the perennial income-generating stocks. Legal & General Group (LSE:LGEN), which also reported numbers in the month, currently has a dividend yield of 9.2%, and was joined by the likes of BP (LSE:BP.) (5.3%), Lloyds Banking Group (LSE:LLOY) (5%), HSBC (7%, and 9.4% including special dividends) and Rio Tinto Registered Shares (LSE:RIO) (7%).”

MOST BOUGHT INVESTMENTS ON INTERACTIVE INVESTOR (ii) IN AUGUST 2024