Investors shifted away from cash funds in favour of higher-growth investments as interest rates fell in November, with a particular focus on the US equity market and technology-focused sectors.
US equity funds have been the clear favourites among investors in November, driven by changing market dynamics, notably the outcome of the US election and evolving monetary policy in the UK, according to Fidelity International’s sales data.
Funds like the Vanguard US Equity Index Fund (0P0000Y4Y1.L) and JP Morgan Global Growth & Income Trust (JGGI.L) increased in popularity on Fidelity’s Personal Investing platform, as investors looked to capitalise on the US market’s growth potential under Trump 2.0.
The JP Morgan Global Growth & Income Trust emerged as the best-selling investment trust for both ISAs and SIPPs, with 74% of its portfolio allocated to US equities. The trust’s performance, coupled with its US-centric strategy, shows the growing appetite for American market exposure.
"We’re seeing a clear shift towards diversification and growth, with global equity and technology-focused funds taking centre stage," said Tom Stevenson, investment director at Fidelity International.
"The popularity of funds like the Artemis Global Income Fund (0P0000W36J.L), HSBC FTSE All-World Index Fund (0P0001BO2R.L) and Vanguard US Equity Index Fund reflects confidence in global and US markets as investors are taking a cautious yet opportunistic approach in the wake of the US election results," he added.
In addition to large-cap US equities, smaller US companies are also drawing investor interest. The Artemis US Smaller Companies Fund (0P0001HDDZ.L) and JP Morgan US Smaller Companies Investment Trust (JUSC.L) have both seen increased sales, reflecting growing confidence in high-growth segments of the US market.
Tech funds continue to attract investor attention
Investors are also maintaining a strong focus on technology, with funds like the Legal & General Global Technology Index Trust (0P000023MW.L) and Fidelity Global Technology Fund (0P00012CU7.L) performing well in November. The ongoing allure of the tech sector is driven by expectations of innovation and growth, with many investors betting on the long-term potential of key tech companies.
“Technology investments, such as the Legal & General Global Technology Index Trust, continue to be of interest, suggesting that investors anticipate conditions for innovation and growth under the new administration," Stevenson said.
Cash funds lose appeal as interest rates fall
A trend in Fidelity’s November data is the decline in demand for cash and near-cash funds. Following the Bank of England’s decision to cut interest rates, traditional cash funds, which had been popular earlier in the year, lost their appeal. Funds like the Royal London Short Term Money Market Fund (0P0000NRQO.L) and Fidelity Cash Fund (0P00018MM4.L), which had featured in previous months, were absent from the top-selling lists in November.
With interest rates falling, investors are shifting away from low-yielding cash investments and reallocating into higher-growth opportunities. This trend reflects a broader shift in investor strategy, as higher growth assets become more attractive when cash offers diminishing returns.
Volatility in the UK stock market creating buying opportunities
While US equities and technology remain dominant, investors are also seizing opportunities in UK-listed shares, with some notable price dips creating what many see as bargain buys. Shares in JD Sports (JD.L) and AstraZeneca (AZN.L) saw significant drops in November, but investors appear to be viewing these as potential buying opportunities.
“There was much volatility among some of the shares featured in the top-selling list in November which presented unique buying opportunities, especially for investors looking to capitalise on lower share price," Stevenson said.
"JD Sports’ shares dropped to a two-year low after the retailer issued a warning that it might miss its profit milestone. Despite the challenges, the shares have become attractive to investors looking for a bargain, with the lower price presenting potential value in the longer term," he added.
Other stocks that featured in Fidelity’s best-selling list include GlaxoSmithKline (GSK.L), M&G (MNG.L), and Marks & Spencer (MKS.L). The latter has been enjoying a surge in its share price, driven by strong performance across its food and clothing divisions. M&S’s return to the FTSE 100 (^FTSE) has drawn considerable investor attention, reflecting optimism around its turnaround.
EasyJet (EZJ.L) also performed well, as strong passenger numbers have fuelled investor optimism about the airline’s future prospects in the travel sector.
Meanwhile, separate data from data provider Calastone shows that investors piled back into UK equity funds in November following three and a half years of consecutive monthly withdrawals and a sharp sell-off ahead of the autumn budget.
Funds invested in UK stocks attracted a net £317m in November from retail investor. The inflows mark a reversal of net outflows as individuals have pulled out more than £25bn over 41 consecutive months since May 2021. In total, investors put a record £3.1bn into British equity funds last month.
