The Notebook: Where are retail investors putting their money?
Where the City’s movers and shakers have their say. Today, Victoria Scholar, head of investment at Interactive Investor, takes the Notebook pen to talk retail investors, Ozempic’s fat profits, and the UK’s inflation forecast
Where are retail investors putting their money?
At Interactive Investor (II), every month we publish a list of the most-bought equities, funds and trusts on the platform. As the UK’s second largest platform for private investors, this provides an up-to-date snapshot of where retail investors are leaning in the markets.
Interestingly, more so than usual in April, FTSE 100 names dominated the list of most popular stocks on the II platform. Retail investors are drawn to names like Legal & General, Lloyds Banking Group and Vodafone partly thanks to their inflation-topping dividend yields at around 8.6 per cent, 5.25 per cent and 11.4 per cent respectively. Adding to that list last month was a new addition, M&G, probably also thanks to its strong dividend yield of around 10 per cent. Another FTSE 100 heavyweight, BAE Systems, continues to attract much investor buying on the platform thanks to its strong stock market performance lately. Shares have gained around 22 per cent year-to-date underpinned by strong demand for defence spending amid the global geopolitical instability.
Crossing the Atlantic, Bitcoin stock market proxy Microstrategy remains popular among retail investors. That’s because shares have gained around 50 per cent so far in 2024, supported by the Securities and Exchange Commission’s (SEC) approval of several spot Bitcoin ETFs in January. Elsewhere in the US, tech giants Tesla and Nvidia continue to dominate II customer portfolios. After a torrid start to the year, shares in Tesla have been regaining ground over the last month fuelled by its earnings report and CEO Elon Musk’s fruitful visit to China. Nvidia had a tougher time in terms of its share price performance in April, but loyal investors clearly seized upon the pullback as an opportunity to buy.
On the funds side, in a month that saw the end of one tax year and the start of another, Vanguard FTSE Global All Cap Index was a new entry at the expense of Vanguard Lifestrategy 60% Equity. For investment trusts, Blackrock World Mining replaced India Capital Growth. Both new entrants are no strangers to the top 10, with Vanguard FTSE Global All Cap Index last appearing in the list in January, and Blackrock World Mining last featuring in February.
Handbags out, Ozempic in
Huge demand for weight loss drugs Ozempic and Wegovy continue to drive an incredible performance for Novo Nordisk. The Danish pharmaceutical company raised its full-year profit outlook after quarterly sales surged 24 per cent and net profits soared 28 per cent. However it is facing increased competition from US rival Eli Lilly. Novo Nordisk is now Europe’s biggest company with a valuation of over $570bn (£455bn) after it overtook French luxury conglomerate LVMH in September last year. LVMH had held the top spot since 2021.
UK slips down the league
The OECD predicts that the UK will be the second weakest growing advanced economy this year, slipping to the bottom of the table by next year. UK GDP is expected to hit just 0.4 per cent in 2024, just in front of Germany with growth of 0.2 per cent. In 2025, the UK is seen growing by one per cent while UK inflation is forecast to average 2.7 per cent in 2024, falling to 2.3 per cent next year, both higher than the Bank’s two per cent target. However, that pales into insignificance compared to Argentina’s which could hit 200 per cent this year.
A bad year for the yen
According to RBC Capital Markets’ Alvin Tan, head of Asia FX strategy, the Japanese yen could slide to 165 per dollar, touching the lowest level since 1986 driven by major interest rate differentials between Japan and the US. Interest rates in Japan are near zero while interest rates in the US are at 23-year highs. So far this year, the yen has been the worst performing major currency. Last week saw major volatility for the yen, fuelled by speculation of intervention from Japan to support the currency.
Quote of the week:
Stamp duty is an unnecessary barrier that penalises people for backing British shares
Richard Wilson, CEO at Interactive Investor, talking about how to boost appetite for UK equities
What I’ve been listening to
Whether you are a beginner investor or have several years of stock market experience under your belt, the world of investment is a minefield to navigate – not helped by a huge amount of industry jargon. To help steer investors on the right track, Interactive Investor’s On The Money podcast has special dedicated episodes focused on answering questions submitted by listeners. In the latest question and answer episode, host Kyle Caldwell is joined by Interactive Investor’s Richard Hunter to tackle various topics, including fund concentration rules, share buybacks and sectors that may benefit from lower interest rates.