Proactive Investors - Legal & General, NVIDIA along with S&P index trackers and funds accessing money markets and the Indian stock market were among the top purchases for investors using Lifetime ISA accounts in the tax year to end of January for the UK's largest investment platform.
L&G, Lloyds Banking Group PLC (LON:LLOY), British American Tobacco PLC (LON:BATS), NVIDIA Corp (NASDAQ:NVDA) and Vodafone Group PLC (LON:VOD) were the top share buys with LISA customers at Hargreaves Lansdown (LON:HRGV), while several government bonds were also favoured.
Topping the funds list was an S&P 500 tracker, followed by other globally focused exchange-traded funds (ETFs), with Fundsmith Equity and Jupiter India the only actively managed funds in the top 10.
LISA investors were unsurprisingly tapping into key market trends of tech and US-focused funds that have led global market returns in the year, said Hargreaves head of investment analysis Emma Wall, as well the Jupiter India fund as Indian stock markets hit highs.
Alongside these growth and momentum trades, she noted that investors had also been taking advantage of sky-high gilt yields and top dividend paying stocks, as well as 2023’s most headline grabbing company Nvidia.
This "bar bell" approach tallies with trades seen across investment platforms over the last 12 months, Wall said, with money market funds and gilts on one side, tech funds and US equities on the other.
"The tide has definitely begun to turn in favour of equities in recent months however, thanks to a strong fourth quarter of 2023.
"A word of caution however, bar Jupiter India, the equity funds LISA investors have been buying into do not offer much geographical or asset class diversification," she added, during investors to review their portfolio and address any biases caused by market movements or trades.
She noted that some funds named ‘Global’ or ‘World’ only invest in developed markets, so investors may have less diversified investments than they expect.
Among the stock selections, she noted that financials have proved popular, in part due to their compelling dividends.
Lloyds reports full year results tomorrow, with analysts Matt expecting strong quarterly numbers and for it to be the only major UK bank to see underlying profit before tax improve from the prior quarter.
However, Wall said there was caution on loan default rates and any update on the FCA’s investigation into motor financing, which some are comparing to PPI mis-selling.
She said British American Tobacco was a "surprise appearance" in the top 10 given attitudes towards 'sin stocks', particularly amongst younger investors.
"Our survey of HL clients reported that more than 50% of respondents would prefer divestment over engagement of tobacco companies, but BAT’s nearly 10% dividend, and commitment to development of their heated tobacco products clearly swung views.”