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It’s been a volatile year for global markets – war, inflation, central bank policy, threat of recession have all played their part in scaring investors off stocks. In June this year, investors took ?4.5 billion out of funds, according to data published today by the Investment Association (IA) – the highest monthly outflow of the year so far and the second highest on record. But July bought some respite.
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Though the cost-of-living crisis remains unabated, soaring inflation is no longer a shock, and markets hate shocks far more than bad news. Forward guidance on interest rate rises from both the Bank of England and the Federal Reserve, and some signs of stability in the oil market meant that global markets tempered and as such investor confidence has improved in August.
All global regions saw improvements in confidence, with the US seeing the largest jump of 27%. The UK increased too, despite double digit inflation and political uncertainty. Europe remains the region where investors hold the least optimism, but confidence even there improved by 8%.
Fund flows on the HL platform over the last month reflect the renewed confidence, with clients opting for higher-risk equities such as emerging markets, small caps and growth-style funds. Similarly the most bought investment trusts tilt towards high-growth and smaller companies as well as dividend payers, while ETF flows reveal a bias for the US – where clients have most confidence on the market outlook.
Top Funds, August (net buys, alphabetical)
| abrdn Global Smaller Companies |
| Baillie Gifford American |
| Baillie Gifford Managed |
| Fundsmith Equity |
| IFSL Marlborough UK Micro-Cap Growth |
| JPMorgan Emerging Markets |
| LF Lindsell Train UK Equity |
| Lindsell Train Global Equity – Distributing |
| Rathbone Global Opportunities |
| Stewart Inv Asia Pacific Leaders Sustainability |
Top Investment Trusts, August (net buys, alphabetical)
| City Of London Investment Trust Ordinary 25p Shares |
| Edinburgh Worldwide Investment Trust Ordinary 1p |
| F&C Investment Trust plc Ordinary 25p |
| Greencoat UK Wind plc Ordinary 1p |
| Monks Investment Trust plc Ordinary 5p |
| RIT Capital Partners plc Ordinary GBP1 |
| Scottish American Investment Co plc Ordinary 25p Shares |
| Scottish Mortgage Investment Trust plc Ordinary Shares 5p |
| Smithson Investment Trust Plc ORD GBP0.01 |
| Witan Investment Trust plc ORD GBP0.05 |
Top ETFs, August (net buys, alphabetical)
| iShares II plc Global Clean Energy UCITS ETF (Dist) |
| iShares III plc Core MSCI World (Acc) |
| iShares plc Core FTSE 100 UCITS ETF (Dist) |
| iShares plc S&P 500 UCITS ETF (Dist) |
| UBS Global Asset Management Bloomberg Japan Treasury 1-3 Year Bond UCITS ETF |
| Vanguard Funds Plc FTSE All World High Dividend Yield UCITS ETF |
| Vanguard Funds plc FTSE All-World UCITS ETF (USD) Accumulating |
| Vanguard Funds plc FTSE All-World UCITS ETF (USD) Distributing – GBP |
| Vanguard Funds plc S&P 500 UCITS ETF USD ACC (GBP) |
| Vanguard Funds plc S&P 500 UCITS ETF USD(GBP) |
Article by Emma Wall, Head of Investment Analysis & Research, Hargreaves Lansdown
About Hargreaves Lansdown
Over 1.7 million clients trust us with ?123.8 billion (as at 30 June 2022), making us the UK’s number one platform for private investors. More than 98% of client activity is done through our digital channels and over 600,000 access our mobile app each month.
