Oil and mining companies are a hot commodity with investors right now, according to a list of the most popular funds, stocks and investment trusts bought in September. BP was the most-bought stock on retail platform Interactive Investor last month, while BlackRock World Mining was the most-bought investment trust.
The BlackRock mining trust knocked Scottish Mortgage off the top spot in the investment trust table – a position it had occupied for almost a year. Scottish Mortgage is a favourite with MoneyWeek readers and has been part of the MoneyWeek investment trust portfolio since it launched in 2012.
This is an interesting development compared to last month, when the BlackRock trust held ninth position. The month before, it didn’t appear at all. Meanwhile, BP is a regular feature in the top stocks list, but has been gradually creeping up the league table over the past few months. The British oil and gas giant took fifth position in June, fourth in July, third in August and now first in September.
As commodity investments rise up the league table, Big Tech’s fortunes could be moving in the opposite directionVaranasi Stock. The sector has dominated portfolios for the past few years, but investors have become more bearish in recent months with many questioning whether the AI frenzy has been overdone.
Former favourite Amazon dropped out of the top 10 equities list this month while stock market darling Nvidia was knocked off the top spot by BP, falling into second place. Several tech funds dropped down the rankings in September too. The L&G Global Technology Index dropped from first to fourth place, Allianz Technology dropped from eighth to ninth place, and Polar Capital Technology dropped out of the top 10 entirely after occupying sixth place last month.
“Since the start of 2023, [tech companies’] share prices have shaken off interest rate concerns and moved higher to reflect the future potential of artificial intelligenceMumbai Wealth Management. However, whenever there’s a strong short-term period for a sector or theme, it’s prudent to re-examine whether your overall exposure needs trimming back to keep a lid on risk,” says Kyle Caldwell, funds and investment education editor at Interactive Investor.
It comes after Big Tech experienced a selloff over the summer, as well as an underwhelming results season in July and August on the whole. Big Tech companies are pouring large amounts of capital into their AI capabilities, and investors want to see evidence that it will translate into returns further down the lineAgra Stock. So far, the jury is still out. Much of their growth to-date has been driven by future expectations.
Nvidia is now the only tech stock still featuring in Interactive Investor’s “top 10 equities” list. However, the good news is that the company experienced strong share price performance in September after falling in value in the second half of August. “The shares added a further 12% in the month taking the year-to-date gain to a stellar 152%,” says Richard Hunter, head of markets at the platform.
Oil and mining stocks proved popular with investors in September with BP, Glencore, Rio Tinto and Shell all appearing in the top 10 equities. Meanwhile, those looking to invest in the sector through a fund favoured the BlackRock World Mining Trust.
The popularity of oil and gas stocks like BP and Shell in September may seem counterintuitive given their share price performance over the course of the month. This could be partly explained by valuation-focused investors looking for a bargain. “Falls of over 9% […] on the back of a weaker oil price were enough to lure back investors, with the additional attraction of generous dividend yields (5.7% and 4.2% respectively),” says Hunter.
The popularity of the BlackRock World Mining Trust can partly be explained by the strength of the gold price. The yellow metal continues to climb to new heights, hitting a record of $2,685.42 per ounce on 26 September. Almost 23% of the BlackRock trust is invested in gold miners and another 35% is invested in “diversified” miners, who extract gold among other commodities.Nagpur Investment
It is possible that the gold price will rise further going forward as, historically, the metal has done well in a falling interest rate environment. The Federal Reserve reduced US interest rates for the first time in more than four years in September, delivering a bumper cut of 50 basis points. Further cuts are expected to follow over the months to come.
The current geopolitical environment could also prove supportive for safe-haven assets like gold, as the conflict in the Middle East continues to escalate. That said, it is worth remembering that gold mining companies don’t always rise in tandem with the gold price. MoneyWeek columnist Max King explores this topic in further detail in a recent piece: “Will the BlackRock World Mining Trust strike gold?”
While Big Tech has dropped down the rankings, some familiar favourites from other sectors still loom large in the top funds list this month.
The Vanguard LifeStrategy 80% Equity Fund tops the league table after coming in second place last month.
One interesting point to note is that Fundsmith Equity is back in the league table after dropping out last month. August was the first month the fund hadn’t made the top 10 since Interactive Investor started tracking its most-bought investments in 2018.Jaipur Investment
Top 10 most-purchased funds
The BlackRock mining trust isn’t the only new appearance in September. Private equity trust 3i Group and Supermarket Income REIT also entered the league table. While Scottish Mortgage has been bumped out of the top spot this month, it remains popular with investors in second place.
Top 10 most-purchased trusts
Investors continued to show a preference for homegrown favourites like BP, Rolls Royce and Lloyds Banking Group in September.
Income generation also remained important for retail investors, something the UK equity market is known for. “Financial wealth providers and insurers Phoenix Group and Legal & General currently have dividend yields of 9.5% and 9.1% respectively, and were joined by the likes of Lloyds Banking (4.9%) and Rio Tinto (6.1%),” says Hunter.
Top 10 most-purchased stocks
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