Technology and travel plays dominated investors’ shopping lists last month and they even took a punt on beleaguered Boohoo (BOO), but inflation-proofing was never far from minds, according to Interactive Investor.
The DIY investment platform has released a rundown of its customers’ most-bought stocks, funds and investment trusts in December, which showed a decisive swing back to technology.
In the list of most-bought trusts, two tech funds entered the top 10 with £3.9bn Polar Capital Technology (PCT ) and £1.5bn Allianz Technology (ATT ) both making an appearance. The £1.7bn Legal & General Global Technology Index Trust, a passive fund that tracks the FTSE World Technology index, was a popular choice among open-ended funds.
None were more popular than tech-heavy Scottish Mortgage (SMT ), the UK’s biggest £18bn trust, which once again came in as the top-selling closed end fund.
Dzmitry Lipski, head of funds research at Interactive Investor, said: ‘Our customers sought adventurous options and inflation proofing strategies in almost equal measure in December amid a backdrop of rising inflation and interest rates.
‘The tech sector suffered a wobble early on in 2021 but bounced back as the market rotation towards value shares fizzle out.’
The timing of that move back into tech has quickly come under question, however, as fears of faster interest rate rises have returned to the fore, undercutting US growth stocks’ high valuations and sparking a sell-off to start the year.
In that vein, many investors turned to investment trusts to inflation-proof their portfolios as UK inflation hit a decade high of 5.1% at the end of last year.
Adopting a multi-asset approach, it is one of a small number of trusts whose main aim is wealth preservation, seeking to protect and grow shareholder capital in real terms via a mix of equities, fixed income, gold and cash. Lyon, who has managed the £1.8bn global trust for 12 years, has said his strategy relies on finding bargains among quality stocks.
Wealth preservation peer Capital Gearing (CGT ), another defensive multi-asset trust, also appeared on the list slightly higher up in seventh place.
Investors in open-ended funds were not focused on inflation protection so much as global growth, with both the Vanguard LifeStrategy 80% Equity and Vanguard FTSE Global All Cap making the top 10.
Fundsmith Equity , stalwart of the most-bought list, also remained in the top spot. Terry Smith’s £28.9bn flagship fund delivered a return of 22.1% last year, slightly behind the 22.9% gain made by the MSCI World benchmark.
Interactive Investor’s top selling investments last month
|1||Fundsmith Equity||Scottish Mortgage (SMT )||Boohoo (BOO)|
|2||Vanguard LifeStrategy 80% Equity||Smithson (SSON )||Genedrive|
|3||L&G Global Technology Index Trust||HarbourVest Global Private Equity (HVPE )||Rolls-Royce (RR)|
|4||Baillie Gifford Positive Change||Polar Capital Technology (PCT )||Lloyds (LLOY)|
|5||Vanguard LifeStrategy 60% Equity||Allianz Technology (ATT )||Tesla|
|6||Rathbone Global Opportunities||City of London (CTY )||International Consolidated Airlines (IAG)|
|7||Vanguard US Equity Index||Capital Gearing (CGT )||Argo Blockchain|
|8||Vanguard LifeStrategy 100% Equity||Monks (MNKS )||Cineworld (CINE)|
|9||Baillie Gifford American||Edinburgh Worldwide (EWI )||ITM Power|
|10||Vanguard FTSE Global All Cap||Personal Assets (PNL )||Omega Diagnostics|
Source: Interactive Investor
While Covid remains a threat to the global recovery, the latest omicron strain is not believed to be as deadly as previous variants, despite being more transmissible.
That has created light at the end of the tunnel for the travel sector, with less concern about another round of restrictive lockdowns and bans on foreign travel. British Airways-owner International Consolidated Airlines (IAG) became a top pick for bargain-hunters in December, as was aerospace engineer Rolls-Royce (RR).
Investors also got adventurous, staking money on Boohoo, whose shares have lost two-thirds of their value since the beginning of 2021 after profit warnings, rising costs and freight worries added to investor concerns about corporate governance at the fast-fashion retailer.
Keith Bowman, equity analyst at Interactive, noted the contrarian play: ‘In the retail arena, online clothing company Boohoo announced its second profit warnings in just four months. Both sales growth and costs had recently taken a hit as more customers than expected returned products, particularly party dresses, ahead of the festive season.’
Another Covid-19 casualty that made a comeback at the end of the year was Cineworld (CINE). Bowman said the shares were ‘on the back foot as its late 2019 takeover target Cineplex won a £700m-plus Canadian court claim for breach of contract’, which Cineworld denies given its aborted takeover came in the face of the global pandemic.
Those who bought in after a 40% crash in mid-December when the judgement was announced have already been rewarded. As the fears around omicron subside, the shares have gained 21% in this year’s three trading days so far.
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