Investors shun active management and technology as cost of living rises


When it comes to individual stock purchases, the FTSE 100 proved a favourite, with financials Lloyds, Legal and General and Aviva topping investors’ shopping lists, alongside commodities stocks Glencore and Rio Tinto and aircraft engine manufacturer Rolls Royce.

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Staying in the air, easyJet also made the top ten, while Tesla defied the odds and remained a top pick for investors despite the trend away from tech stocks – although debate rages of course as to how it should be classified.

Fundsmith Equity, which topped the list of funds last month, also defied the odds, despite liabilities pushing back their active counterparts.

The next seven funds on the list were all passive products, with six coming from Vanguard, while eighth place was taken by HSBC FTSE All World.

Rounding out the top ten were alternatives, with TB Guinness Global Energy and FTF Clearbridge Global Infrastructure Income the funds chosen for investors to try to hedge against inflation.

This theme extended to investment funds, with Greencoat UK Wind, Blackrock Energy and Resources Income and BlackRock World Mining all making the top ten.

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Capital preservation also remains a theme as investors grapple with ever-increasing inflation, the beneficiaries of which were Capital Gearing, Ruffer and Personal Assets, taking fourth, fifth and tenth place respectively.

Reflecting the challenge at the top of the open list, Scottish Mortgage took the investment fund crown despite its high-tech exposure, while UK generalist City of London came second.

Dzmitry Lipski, head of fund research at ii, explained that as uncertainty returned, investors had abandoned assets in favor of “low-cost and passionless liabilities”.

“Given that in volatile markets the impact of charges is all the more felt, this is not an unreasonable strategy,” he added.

“That said, there is also plenty of room for active strategies – as the investment trust industry shows.

“While capital preservation strategies dominate and occasional solace is found in a British dividend hero, investors are also embracing some higher risk options.”

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Across markets, however, the picture is less pretty for investors’ top picks, as ii senior equity analyst Keith Bowman explained: “Shares of electric vehicle maker Tesla fell around 11% over the month As with the broader market, investors continued to worry about a likely slowdown in economic growth and its impact on earnings going forward.

“Similarly, shares of BP fell nearly 11% as those same fears of an economic slowdown or even recession fueled a plunge in the price of oil. Shares of Glencore and Rio Tinto were down nearly 11%. 14%, with these same fears also weighing on commodity prices.

“easyJet slashed its summer capacity and warned of rising costs as it and the wider travel industry faced challenges including staff shortages. Its shares fell 29% in course of the month.”


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