UK stocks receive a boost from retail investors

UK instruments soared in popularity among retail investors in January, according to Freetrade’s monthly Retail Investor Barometer.

Lloyds Banking Group and the iShares FTSE100 tracker fund moved into the group of most popular stocks, with BP just missing out on the top 15*.

The iShares UK Dividend ETF also saw a significant growth in buy orders, making it the most popular ETF behind trackers following the S&P 500 and the FTSE100.

Additional key findings are:

December’s rising investment in ETFs continued into January, with both Vanguard’s S&P 500 accumulation and income-distributing tracker ETFs now firmly established among the most popular investments in 5th and 6th place respectively

This trend was pronounced among younger investors, aged between 18 and 35 years of age. While they largely kept faith with tech stocks, the growing investment in passive ETFs suggests they are diversifying their portfolios

Netflix returned into the top 15 most popular stocks, as some investors were prepared to “buy the dip” following its recent Q4 earnings announcement

Commenting on the findings, Freetrade senior analyst Dan Lane said:

“A heady mix of rate rises and post-pandemic life getting closer wasn’t enough to pull the plug on the tech party altogether, although it did prompt a reassessment of how diversified we all were.

“The reality is the S&P is still dominated by the tech giants and opting for a tracker still comes with a big dollop of the FAANGs. But these ETFs climbing the buy list is a clear sign of investors wanting a much broader exposure to US life after lockdown.

“The green shoots of some Blighty-listed stocks among the top buys shows the UK is back on the menu and there is growing appetite for the lowly-valued market. Rate rises are good news for banks’ net interest margins – a prospect not lost on investors buying into Lloyds, the UK’s largest mortgage lender.

“And if it’s dividends you want, arguably the UK is a much more friendly place to find them than across the water. High growth firms tend to put cash back into that growth – something investors liked at the beginning of the pandemic.

“But the UK old guards with progressive dividend policies are back in vogue with investors pushing the income producers up the list.”

Lucid Group falls away

In contrast, Lucid Group saw a big drop in popularity among retail investors, with many deciding to sell the electric vehicle stock**.

Lane added:

“With Tesla heading up the top buys again and Lucid falling out of the list altogether, there seems to be the feeling that, if anyone can make it through a difficult time for EVs, it’ll be the poster child.

Tesla’s Q4 and full-year 2021 results were strong but, importantly, it is much further down the road than any of its peers, Lucid included.

A big hit to Lucid’s progression could be the supply chain constraints Musk mentioned in the firm’s full-year results. Given its scale, Tesla is likely to be at the front of the queue when it comes to critical materials – Lucid, not so much.”

ENDS