Most-bought investments: November 2022

Terry Smith is a lone ranger as passive funds dominate, while investment trusts become the ‘go-to’ for active strategies.

• Investors pounce on Harland & Wolff following potential Ministry of Defence contract.
• First time that only one active fund makes the top 10.
• Over the course of 2022 to date, only two investment trusts have consistently kept their places in the top 10: Scottish Mortgage and City of London.

interactive investor, the UK’s second-largest direct to consumer investment platform, outlines the most-bought stocks on its platform during the month of November.

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At the start of this year, we witnessed the ‘great rotation’ away from growth stocks towards more traditional value plays, and as we approach the end of 2022, this trend is continuing. Tesla (NASDAQ:TSLA) proved an exception, and while FTSE blue-chips such as GSK (LSE:GSK) and BP (LSE:BP.) feature strongly, there’s some less well-known selections too.

Opportunistic direct equity investors swooped on shipyard Harland & Wolff (LSE:HARL) in November, which catapulted into fifth place in the interactive investor best buys. This comes following news that three Royal Navy support ships are to be built in Belfast after a consortium including Harland and Wolff was selected as the preferred bidder, subject to ministerial approval for this £1.6 billion Ministry of Defence contract.

November saw the highly anticipated Autumn Statement from Chancellor Jeremy Hunt. A key task for Hunt was to reassure markets with the measures he was introducing. November, overall, brought some more positivity to markets with the FTSE 100, for example, enjoying its best monthly performance in two years.

Nevertheless, the UK still grapples with a number of challenges, including the cost-of-living crisis, sky-high inflation, and rising interest rates.

So, how have investors been positioning within this environment?

Direct equities in detail

Looking at the most-bought equities among ii customers during the month of November, there are some familiar FTSE 100 names such as Glencore (LSE:GLEN) and Lloyds Banking Group (LSE:LLOY), as well as a few newcomers, namely Harland & Wolff and BT Group (LSE:BT.A).

FTSE giant, and a regular on the ii most-bought equities list, Vodafone Group (LSE:VOD), jumped from number six to number one in November.

Electric vehicle giant Tesla held firm at number two.

Cineworld Group (LSE:CINE) is also back on the most-bought equities list for November.

Commenting on the most-bought direct equities in November, Keith Bowman, Senior Investment Analyst, interactive investor, says: “A share price fall of close to 10% for telecoms mammoth Vodafone left investors taking interest. Half-year results downgrading its annual profit hopes given its ongoing battle with rising costs including those for energy set the share price sliding.

“Similarly, interim results from BT Group also failed to inspire, leaving its share price down 6% over the month. An acceleration in broadband line losses and weakness for its corporate enterprise business accompanied group wide plans to cut costs even further.

“Historic dividend yields of over 6% for both Vodafone and BT continue to offer investor attraction.

“Shares for banking favourite Lloyds railed by more than 10% during November. An Autumn Statement attempting to reverse damage from the previous mini-budget helped calm mortgage rates, for which Lloyds is a big provider, aided by expectations that future global interest rate rises may now prove less aggressive.

“Hopes of an easing in Chinese pandemic restrictions and a freeing of its economy helped keep potential beneficiaries such as the miners and Glencore in the eye of investors. Its shares rose by almost 13% over the month.”

Funds and trusts in detail

Fundsmith Equity was yet again the most-bought fund in November, with Vanguard LifeStrategy 80% Equity in second place.

Terry Smith’s Fundsmith Equity fund is the only active strategy among November’s best buys, and this likely reflects ongoing caution over not knowing what active funds are best placed to invest in at a time of great uncertainty. ii has seen evidence of this in previous periods of volatility.

Vanguard funds continue to dominate, making up six of the top 10 most-bought funds in November.

Investment trusts

The first several months of the year saw interactive investor customers turn towards capital preservation strategies as defensive armoury to weather market storms and help defend against inflation. However, we have seen this begin to shift towards the latter part of the year, and only one remains in November’s best buys -Ruffer Investment Company (LSE:RICA).

Instead, investors have sought solace in the globally diversified investment trusts that have been weathering market ups and downs for well over a century, including Alliance Trust (LSE:ATST) and F&C Investment Trust (LSE:FCIT). These trusts have weathered political, market and social shocks and continued to deliver value for shareholders over the long term.

And while many investors are choosing funds to ‘go passive’, they are using investment trusts for their active selections, and as well as the global trusts have been diversifying into tech, alternatives and Vietnam.

Commenting on the most-bought funds and trusts on ii during the month of November, Kyle Caldwell, Collectives Specialist, interactive investor, says: “While passive strategies continue to dominate our top 10 most-bought funds, with Fundsmith Equity the only outlier, there’s been plenty of chopping and changing among investment trusts.

“Over the course of 2022, just two investment trusts have consistently kept their places in the top 10: Scottish Mortgage (LSE:SMT) and City of London (LSE:CTY).

“Scottish Mortgage, which invests in businesses aiming to deliver high growth in the years to come, has consistently occupied the top spot since June 2019, with its recent performance woes not denting its popularity.

“The other trust that’s been in the top 10 all year is City of London, which predominately invests in FTSE 100 listed dividend-paying companies. The trust, which has been managed by Job Curtis since 1991, has raised its dividend for 56 consecutive years. It offers a high dividend yield today, of around 4.9%.

“In November, there were four new entries: BlackRock World Mining Trust (LSE:BRWM), VinaCapital Vietnam Opp Fund (LSE:VOF), Polar Capital Technology (LSE:PCT), and NewRiver REIT (LSE:NRR).

“Overall, there’s a mixture of core holdings (such as F&C Investment Trust and Alliance Trust) and adventurously invested strategies (including VinaCapital Vietnam Opportunities and Polar Capital Technology). With the punchier strategies, however, it is important to limit exposure, rather than bet the house.

“A core and satellite strategy is one way to reduce risk. The core of the portfolio should be investments that provide few surprises. Core holdings should be thoroughly diversified and ideally low-cost because high charges can drag on returns over time.”

Top 10 most-bought investments on interactive investor in November 2022