Argo Blockchain PLC (LON:ARGO) was the most popular share on two of the three biggest UK investment platforms, while GameStop Corp (NYSE:GME) was not just the preserve of American YOLO traders streaming out of Reddit.
Across all three of the major platforms, retail investors also dived into all three of London’s cannabis-focused newcomers, MGC Pharmaceuticals Ltd (LON:MXC), Cellular Goods PLC (LON:CBX) and Kanabo Group PLC (LON:KNB), as well as pandemic bounce-back stocks such as Rolls Royce Holdings (LON:RR.) and International Consolidated Airlines Group (LON:IAG), together with blue-chip heavyweights to tap into the next upswing in the economic cycle, such as Vodafone PLC (LON:VOD), BP PLC (LON:BP.), GlaxoSmithKline PLC (LON:GSK) and Lloyds Banking Group PLC (LON:LLOY).
Ahead of the ISA and SIPP deadline in early April, investors were also piling into investment trusts and funds with significant exposure to Big Tech in the US and China, led by Scottish Mortgage Investment Trust PLC (LON:SMT), with popularity also for responsible or ESG themes, and other side of the coin, mining.
Among the funds, Fundsmith Equity remained a favourite, while almost the full range from Baillie Gifford, the manager of the Scottish Mortgage trust, was proving amazingly popular.
Top 10 lists for each platform for February
Top 10 shares bought on the Hargreaves Lansdown platform
BP PLC (LON:BP.), British American Tobacco PLC (LON:BATS), Cellular Goods PLC (LON:CBX), GlaxoSmithKline PLC (LON:GSK), Imperial Brands Group PLC (LON:IMB), MGC Pharmaceuticals Ltd (LON:MXC), National Grid PLC (LON:NG.), Rolls Royce Holdings PLC (LON:RR.), Tesco PLC (LON:TSCO), Unilever PLC (LON:ULVR).
Top 10 shares on AJ Bell
Argo Blockchain PLC (LON:ARGO), GlaxoSmithKline PLC (LON:GSK), Unilever PLC (LON:ULVR), GameStop Corp (NYSE:GME), Rolls Royce Holdings (LON:RR.), International Consolidated Airlines Group (LON:IAG), BP PLC (LON:BP.), Vodafone PLC (LON:VOD), Tesla Inc (NASDAQ:TSLA), MGC Pharmaceuticals Ltd (LON:MXC).
Top 10 shares on Interactive Investor
Argo Blockchain PLC (LON:ARGO), Rolls Royce Holdings (LON:RR.), GlaxoSmithKline PLC (LON:GSK), BP PLC (LON:BP.), Unilever PLC (LON:ULVR), MGC Pharmaceuticals Ltd (LON:MXC), International Consolidated Airlines Group (LON:IAG), Lloyds Banking Group PLC (LON:LLOY), Kanabo Group PLC (LON:KNB), GameStop Corp (NYSE:GME).
Top 10 investment trusts on AJ Bell
Scottish Mortgage Investment Trust PLC (LON:SMT), Scottish Investment Trust PLC (LON:SCIN), Edinburgh Worldwide Investment Trust PLC (LON:EWI), Monks Investment Trust PLC (LON:MNKS), Baillie Gifford US Growth Investment Trust PLC (LON:USA), Pacific Horizon Investment Trust (LON:PHI), Fidelity China Special Situations Investment Trust PLC (LON:FCSS), Allianz Technology Investment Trust PLC (LON:ATT), JPMorgan China Growth & Income Investment Trust PLC (LON:JCGI), F&C Investment Trust PLC (LON:FCIT).
Top 10 investment trusts on II
Scottish Mortgage, Edinburgh Worldwide, Fidelity China Special Situations, Pacific Horizon, JPMorgan China Growth & Income, Allianz Technology, Baillie Gifford US Growth, Monks, BlackRock World Mining Trust PLC (LON:BRWM), Polar Capital Technology Trust PLC (LON:PCT).
Top 10 investment trusts on HL
Baillie Gifford China Growth Trust PLC (LON:BGCG), Baillie Gifford US Growth, BlackRock World Mining, Edinburgh Worldwide, Fidelity China Special Situations, Greencoat UK Wind PLC (LON:UKW), JPMorgan China Growth & Income, JPMorgan Emerging Markets Investment Trust PLC (LON:JMG), Monks, Pacific Horizon.
Top 10 open-ended funds on II
Baillie Gifford American, Fundsmith Equity, Baillie Gifford Positive Change, Baillie Gifford China, Baillie Gifford Global Discovery, Baillie Gifford Pacific, Vanguard Lifestrategy 80% Equity, Baillie Gifford Long Term Global Growth, Vanguard Lifestrategy 60% Equity, Baillie Gifford Managed.
Top 10 open-ended funds on HL
Baillie Gifford American, Baillie Gifford China, Baillie Gifford Global Discovery, Baillie Gifford Managed, Baillie Gifford Pacific Fund, Baillie Gifford Positive Change, HL Select Global Growth Shares, JPMorgan Emerging Markets, Premier Miton UK Smaller Companies, Rathbone Global Opportunities
Top 10 open-ended funds for AJ Bell
Fundsmith Equity, Baillie Gifford American, Baillie Gifford Global Discovery, Baillie Gifford Positive Change, Baillie Gifford China, Vanguard Lifestrategy funds, Fidelity Index World, Baillie Gifford Pacific, Fidelity Global Special Situations.
Rise in responsible funds
Across the fund industry, responsible investment funds have been a huge trend, with net retail sales of £1.2bn in January 2021, according to data from the Investment Association (IA) today.
Over the last year, responsible investment equity funds made up the highest proportion of flows, with 66% growth over the past 12 months, or average monthly sales of £510mln, to give responsible investment a total of over £56bn in funds under management.
Of the funds invested in responsible investment funds in January, £703mln was invested in equity funds, £180mln was invested in bond funds and £241mln in mixed asset funds.
Sustainability is a focus of 66% of the total FUM of responsible investment funds, with 72% excluding certain types of investments, and 42% doing both.
Analysis: going for growth and active funds
“Fund investors have been going for growth in their ISA so far this year, filling their tax shelters with a raft of offerings from Baillie Gifford, and of course, the ubiquitous Fundsmith Equity,” said AJ Bell financial analyst Laith Khalaf.
“That looks to be in large part to be down to the success of Baillie Gifford’s fund range, which account for half of the top ten most popular ISA funds in the last month. There’s still another month to go in ISA season though, and it remains to be seen whether the shift towards cyclical and value stocks we have seen in the market starts to manifest itself in ISA investments too."
Teodor Dilov, fund analyst at Interactive, said the rise in popularity of Baillie Giffords actively managed funds made it “difficult to say” whether investors are now favouring active strategies over passives trust.
“Credit where credit is due – Baillie Gifford have done a lot to communicate what active management actually means to them with their ‘actual investors’ campaign,” Dilov said.
He added: “It is interesting to see that while passive funds have fallen down the rankings in recent history reflecting the swing to active managers since the onset of coronavirus generated market volatility, Vanguard’s LifeStrategy 80% Equity and the 60% variant have held on to a top 10 ranking - proving to be the most popular option among our customers and this uses passive strategies.
“The burning question for many investors is what does the next couple of months have in store for global markets, with a number of countries taking their first steps towards easing stringent Covid-19 lockdown restrictions? It’ll be interesting to see how and if the make-up of our bestsellers lists changes as we enter a post lockdown world.”
Scottish Mortgage Investment Trust stands out as absent in the HL list of top buys, says the platform's senior investment and markets analyst, Susannah Streeter.
“It had been a firm fixture in the top of the stocks list because of its holdings of star tech companies like Tesla and Amazon. But as the market became more cautious about the super high valuations leading to share price falls in February, some investors have also been retreating from holdings in the trust, also judging its share price as too frothy,” says Streeter.
“The spike in bond yields is affecting tech firms as higher rates threaten the value of future earnings. There are concerns that the Federal Reserve will start tightening monetary policy and although it is keeping its stance unchanged, that hasn’t calmed the bond markets, which have an eye on higher inflation over the coming months.”
Cyclicals, YOLO frenzies and the ISA rush
Khalaf said the individual shares picked by ISA investors in February exhibit a cyclical flavour, such as Rolls Royce, IAG, and BP all being stocks that should do well if there is a strong economic recovery.
“But ISA investors have also picked Tesla and Unilever, and while both have suffered a fall from grace in recent weeks, they are long term winners that have benefited from investors’ focus on future earnings growth. This split between growth and value stocks reflects a dichotomy of views in the market, on whether or not inflationary pressures are building, and perhaps promising a reversal of the trends we have seen in the market for the last decade," he said.
“While the Gamestop frenzy has died down, for now at least, trading activity at the back end of January and early February means it’s still one of the most popular ISA share purchases of the last month.”
Keith Bowman, equity analyst at Interactive Investor, attributed comments from Tesla boss Elon Musk about cryptocurrency as one of the key reasons to help Bitcoin miner Argo Blockchain stay in investors' thoughts.
“The rollout of vaccinations and a timetable towards loosening Covid restrictions from the UK government left travel stocks such as IAG and easyJet on the radar. Both IAG and easyJet remain down over the last year, although each is up by more than a fifth since late October – just prior to announced vaccination development success," Bowman noted.
“For the banks, recent full year results placed the likes of Lloyds and Barclays firmly under the microscope. Broader concerns for the rise of inflation under huge Central Bank action programmes has also raised the potential for increased interest rates going forward – a prospect potentially positive for bank profitability given widened deposit versus lending rates.”
As vaccine roll outs and lockdowns help limit the spread of infection, companies hit hard by the collapse of international travel have become more sought after, says Streeter, which has led to investor demand for aircraft engine manufacturer Rolls Royce.
“Although there is no flight path to reopening laid out, there are high hopes that pent up demand for holidays is translating into bookings, giving much needed relief to the airline industry and the companies which support it.
BP was one of the most popular stocks last month, Streeter also notes, as the oil supermajor noses out of the coronavirus storm, finding the journey a lot easier given the recent rise in the oil price. “The better prospects for global growth has boosted energy demand, giving investors more confidence and BP is turning a corner. However, the company still has to navigate the huge swell of risks ahead, given its pledge to rapidly decarbonise the business.”
Consumer goods giant Unilever is one that has shown resilience during the pandemic, with high demand for hygiene products in particular, and interest among investors has also been particularly strong in February, pushing it high on the list of the most popular stocks.
But despite an increase in the dividend, Streeter noted that its share price has been declining in recent weeks after a fall in underlying profits disappointed investors.
With just one month to go to fill their ISA allowances, and tax rises in the post from the Chancellor, the platforms are all expecting the usual rush to beat the 5 April deadline.
“Those who find themselves running out of time should remember they don’t have to make an investment decision before the 5th April, if they need a bit more thinking time,” Khalaf noted. They can just make their ISA contribution and hold it as cash, pending an investment decision when they’ve got a bit more breathing space to consider the options.”