As the new tax year begins, it’s a useful time for investors to plan their investments and make the most of their annual ISA allowance.
High interest rates and concerns about inflation may have rattled market nerves in 2023. That can make it hard to decide where to put your money if you have spare cash to spend on ISAs and SIPPs. But as most investors know, market volatility is normal and investments can pay dividends over the long term.
According to fund supermarket AJ Bell, investors have opted for a mix of income and passive strategies so far this year, and the focus remains on tech.
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So where are investors putting their investments? We look at the most popular funds, investment trusts and shares that AJ Bell ISA customers put their cash into between 1 January and 5 April 2024.
Most popular ISA funds
ISA investors have been favouring global funds, with four Vanguard funds, HSBC’s All Word Index fund and Fidelity Index World making the top 10 list.
But it seems UK stocks have been left behind due to their underperformance. Laith Khalaf, head of investment analysis at AJ Bell, says just this year the FTSE All Share has yielded 3.3% in comparison to a 8.7% return on the MSCI World Index.
Khalaf said: “Zoom out a little, and over 10 years the FTSE All Share had returned 74.1%, compared to 221.5% from the MSCI World Index. It doesn’t take a genius to work out why investors are eschewing UK funds in favour of global alternatives.”
Even though the FTSE 100 index recently reached a record high, it still lags behind the S&P 500.
Another reason investors are swaying towards global funds is due to tech heavyweights feeding through S&P 500 trackers.
“The wheels looked to be coming off the tech boom in 2022 as shares in the likes of Apple and Microsoft suffered a rare setback, but the emergence of ChatGPT at the back end of 2022 created a huge amount of interest in the rollout of artificial intelligence, which has provided fresh impetus to the long running bull market in technology stocks,” Khalaf adds.
| Rank | ISA funds |
|---|---|
| 1 | Fidelity Index World |
| 2 | Vanguard S&P 500 ETF |
| 3 | iShares S&P 500 ETF |
| 4 | L&G Global Technology Index |
| 5 | HSBC FTSE All World Index |
| 6 | Vanguard Lifestrategy |
| 7 | Vanguard FTSE All World ETF |
| 8 | Royal London Short Term Money Market |
| 9 | Jupiter India |
| 10 | Vanguard FTSE Global All Cap Index |
Most popular ISA investment trusts
ISA investors have opted for income investment strategies so far in 2024, with Greencoat UK Wind making the list and JPMorgan Global Growth & Income taking the top spot.
India’s growing economy is also in sight, with Jupiter India on the top ISA funds list (see above) and Ashoka India Equity coming in as the fifth most popular ISA investment trust.
Khalaf said: “As China has fallen out of favour with investors, India is usurping its place and consequently its market is performing very strongly. So far this year the MSCI India index has returned 8.6%, while the MSCI China index has returned -0.4%.”
| Rank | ISA investment trusts |
|---|---|
| 1 | JPMorgan Global Growth & Income |
| 2 | Alliance Trust |
| 3 | Pershing Square Holdings |
| 4 | Polar Capital Technology |
| 5 | Ashoka India Equity |
| 6 | Greencoat UK Wind |
| 7 | Brunner Investment Trust |
| 8 | Fidelity European Trust |
| 9 | Avi Global Trust |
| 10 | JPMorgan American |
Most popular ISA stocks
When it comes to the most popular ISA stocks, investors have been buying tech stocks and income shares.
It doesn’t come as a surprise that Nvidia is the most popular ISA stock. The chip giant became the fourth-largest company back in February as it hopped on to the AI wave early on before its competitors Microsoft and Google. As a result, its share price shot up 239% in 2023 and between January and February, its share price surged 51%.
Dan Coatsworth, investment analyst at AJ Bell, said: “ISA investors appear to have taken the view that the AI theme remains red-hot which presents further opportunities for Nvidia to grow earnings.
“This would have been a fruitful call for anyone buying at the start of 2024, given how the shares had extended last year’s rally to deliver a further 78% gain between 1 January and 5 April.”
Operational data platform Samsara overtakes tech giant Microsoft to take second place. Experts at AJ Bell say some investors prefer to stay away from the obvious Nvidia and big tech stocks, and “play the AI theme” differently. And while Microsoft takes third place, this was expected with it being a ‘safe’ option for investors.
| Rank | ISA stocks |
|---|---|
| 1 | Nvidia |
| 2 | Samsara |
| 3 | Microsoft |
| 4 | Phoenix |
| 5 | CleanSpark |
| 6 | M&G |
| 7 | Legal & General |
| 8 | HSBC |
| 9 | Reckitt |
| 10 | BT |
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