Most-bought investments: March 2022

Investors split between inflation-busting capital preservation strategies, passives, and growth.

• Polar Capital Technology, Allianz Technology, Edinburgh Worldwide and Baillie Gifford US Growth Trust, all exited the top 10

With the cost-of-living crisis dominating, and at a time when stock markets still seem to pose more questions than answers, investors flocked to capital preservation-focused investment trusts in March, with an element of inflation-proofing. Step forward Capital Gearing (LSE:CGT), RIT Capital Partners (LSE:RCP), Ruffer Investment Company (LSE:RICA)and Personal Assets (LSE:PNL), which all made the top 10.

Inflation-proofing could well be behind March’s renewable energy theme, too, with JPM Natural Resources and Greencoat UK Wind (LSE:UKW)making the top 10 in funds and investment trust land, respectively.

Passive strategies dominated fund purchases, although Fundsmith Equity remains rooted at the top of the funds charts, as does SScottish Mortgage (LSE:SMT), despite the tech sell-off that has characterised the start of the year.

interactive investor’s monthly best buys do not take into account regular monthly investors, so are only telling a story of more ‘hands on’ investing trends in the month of March.

JPMorgan Russian Securities (LSE:JRS) was the second-most popular pick for hands-on investment trust investors in March, which may continue to surprise some, while three Russian-oriented miners, Polymetal (LSE:POLY),EVRAZ (LSE:EVR), and Eurasia Mining (LSE:EUA) remain in the most-bought list for a second consecutive month.

Commenting in his market note this morning, Richard Hunter, Head of Markets, interactive investor, says: “the conflict between Russia and Ukraine continues to engender a split between hope and despair. Reports of some progress in talks aimed at ending the war continue to be offset by further reports of Russian atrocities which have seemingly strengthened the resolve of other nations to ratchet up sanctions once more.”

While there will always be active investors who choose to lean on volatility, interactive investor looks at what you need to know when trading Russia-focused stocks in this piece here.

Direct equities in detail

Commenting on the most-bought equities on ii in March, Victoria Scholar, Head of Investment, interactive investor, says: “FTSE blue chips Lloyds (LSE:LLOY), Barclays (LSE:BARC), Rolls-Royce (LSE:RR.), Legal & General (LSE:LGEN) and British Airways’ parent company IAG (LSE:IAG)retained their top spots on the most-bought list of stocks on the interactive investor platform in March.

“Alongside IAG in the airline sector, easyJet (LSE:EZJ) has joined the list of best buys after it slumped more than 40% in just three weeks as Russia-Ukraine tensions flared up, prompting a flurry of buying activity at its newly discounted share price.

“This investment has, so far, fared well with easyJet rallying around 35% since the lows at the beginning of March, although there is still another 30% to go to retest the February highs.

“Again, in March we continued to see some investors lean into market volatility. Three Russian oriented miners, Polymetal, Evraz, and Eurasia Mining remain in the most-bought list for a second consecutive month, driven by demand for Russian assets after a sharp sell-off at the onset of war. Demand was also driven by investor interest in the mining sector, which has outperformed lately amid the favourable backdrop of commodity price inflation.”

Investment trusts and funds in detail

Commenting on the most bought funds and trusts, Kyle Caldwell, Collectives Specialist, interactive investor, says: “Investors are in two camps. Some are viewing defence as the best form of attack at a time when there’s no shortage of headwinds: the war in Ukraine, inflation at its highest level in decades and interest rates moving higher. This is reflected by RIT Capital Partners, Ruffer Investment Company and Personal Assets entering our top 10 most-bought trust table for March. Capital Gearing has also maintained its place. The quartet are wealth preservation investment trusts, which prioritise protecting investor capital. Each has plenty of defensive armoury in an attempt to weather stock market storms.

“Other investors have been leaning into volatility, such as through JPMorgan Russian Securities – which is in the top 10 for the second consecutive month. Investors have also been adding to commodities, which has boosted the popularity of JPMorgan Natural Resources. It was the sole new entry to our top 10 funds this month. BlackRock World Mining Trust (LSE:BRWM) is continuing to prove popular, having entered our top 10 trust table in January. Commodities have been on a tear for the past two years, with some predicting the early stages of a new ‘supercycle’ for the asset class – driven by the global green revolution, as major economies strive to decarbonise.

“Inflation concerns will have been another factor behind the popularity of JPMorgan Natural Resources and BlackRock World Mining Trust. It will have also been a driver behind Greencoat UK Wind entering the top 10 trust table. The trust, which as the name suggests invests in wind farms in the UK, aims to provide investors with an annual dividend that increases in line with RPI inflation. 

“Another trend in March was growth-focused investment trusts becoming less popular. Polar Capital Technology (LSE:PCT), Allianz Technology (LSE:ATT), Edinburgh Worldwide (LSE:EWI) and Baillie Gifford US Growth (LSE:USA)trust, all exited the top 10.

“Value shares, which are viewed as better bets than growth shares to prosper from the post-pandemic economic recovery and higher interest rates, have been in favour in the first quarter of 2022. Such companies, which tend to be cyclical, offer ‘jam today’ as their valuations are not based on producing high profits in the future.

“Technology and other growth shares, meanwhile, are viewed as ‘jam tomorrow’ stocks, as their more expensive valuations are hinged on their future earnings potential. Such companies are negatively impacted by high inflation and increases in interest rates because both devalue their expected future earnings.”

Top 10 most bought investments on interactive investor in March 2022