UK retail investors are jumping into US technology megacap stocks, with Magnificent Seven technology giants Nvidia Corporation, Microsoft Corp (NASDAQ:MSFT) and Tesla Inc (NASDAQ:TSLA, ETR:TL0) among the most popular ISA investments at the moment.
AJ Bell data shows that tech exposure and income-yielding stocks are top of the pile as ISA customers shoot for tax-free capital gains and dividends.
Alongside US tech giants, high-yielding British groups including insurance firms Phoenix and Legal & General Group PLC (LSE:LGEN), fund manager M&G, FMCG group Reckitt Benckiser and telecoms companies BT and Vodafone make the list of ISA favourites.
Oil majors Shell and BP also made the cut.
US-listed bitcoin miner CleanSpark was a surprise addition to AJ Bell’s table, as a way for investors to bet on the resurgence of cryptocurrency prices, while US-listed Samsara has emerged as an artificial intelligence play.
Dan Coatsworth, investment analyst at AJ Bell, said: “Samsara has been a hit with people investing in their ISA this year, perhaps because it offers a different way to play the AI theme rather than going down the obvious route of Nvidia or one of the big tech providers.
“Samsara runs a platform that brings together important operational data for businesses and governments, and it uses video technology that incorporates artificial intelligence.”
Coatsworth added: “Investors have also shown an appetite for higher risk, with stocks linked to bitcoin in demand during ISA season.
“Bitcoin miner CleanSpark is in the top 10 most popular stocks based on net flows among AJ Bell ISA customers year-to-date while business intelligence firm MicroStrategy, which holds 214,246 bitcoin worth approximately $15 billion, is just outside of the top 10 based on net buys.”
Lloyds and Barclays drop out
British banking giants were surprisingly absent from the table.
According to Coastworth: “One might expect ISA investors to always gravitate towards an obvious group of blue chips such as banks like Lloyds and NatWest which have been popular stocks for decades. However, it seems some of these names are no longer cutting the mustard with investors.£
Lloyds does not feature in this year’s top 10 most popular stocks list, while Barclays, another previous historical favourite, was the least popular stock based on net outflows during the period.
“Banks have been challenging investments over the years as share prices have often fallen by a greater amount each year than returns generated from dividends,” added Coastworth.
“Perhaps burned by this experience, income investors are starting to show a preference for the life insurance sector instead, with Phoenix and Legal & General popular ISA purchases.”