Investors appear to be on a hunt for UK bargains as exchange traded funds (ETFs) tracking the FTSE 100 and FTSE 250 indices are among the most bought on investment platform Youinvest in January.
This may be surprising as Brexit-related drama continues at Westminster as the UK government decides how to leave the EU - if they go through with it.
Unfortunately, the prolonged negotiations have led to declines in UK equities although investors clearly believe there may be value to be found.
WHAT ARE ETFs?
Over the last few years, ETFs have become more popular by offering a low-cost way to access various markets, assets classes or track well-known indices such as the FTSE 100.
In high demand were iShares Core FTSE 100 UCITS ETF (IE0005042456) and Vanguard FTSE 100 UCITS EFT (IE00B810Q511), which both track the index by investing in physical index securities.
Unsurprisingly, both ETFs have an identical top 10 comprising the likes of oil major Royal Dutch Shell (RDSB), high street bank HSBC (HSBA) and healthcare giant GlaxoSmithKline (GSK).
As for the cheaper of the two, the iShares version clinches this with an ongoing charge of 0.07%, slightly better than Vanguard’s 0.09% fee.
HIGH DIVIDEND YIELDS IN DEMAND
Investors are also keen on high dividend yields by investing in iShares UK Dividend UCITS ETF (IE00B0M63060) despite the risk that the dividends may not be sustainable.
An example of this is Vodafone (VOD) with a forward 12 month dividend yield of 9.5%, implying the shares are unfairly priced too low or the dividend forecasts are too ambitious.
In a recent podcast, we discussed how investors can get a high yield and the potential risks.
Among the ETF’s top holdings are gambling company Plus 500 (PLUS), miner Evraz (EVR) and pub chain operator Greene King (GNK).
Outside of the UK, the US - specifically the S&P 500 - was in focus via Vanguard S&P 500 ETF (IE00B3XXRP09) and iShares Core S&P 500 UCITS ETF (IE00B5BMR087).
The S&P 500 is based on the market cap of the 500 biggest companies so a lot of familiar names are in the top 10, including tech giant Microsoft, iPhone seller Apple and online retailer Amazon.
It differs from the Dow Jones, which focuses on the value of 30 large, publicly owned companies, while the NASDAQ tracks over 3,000 stocks.
The UK and US were not the only areas of interest for investors with Vanguard FTSE Japan UCITS ETF (IE00B95PGT31) and Vanguard FTSE Emerging Markets UCITD ETF (IE00B3VVMM84) also making the cut.
Below is a list of the top 10 ETFs bought over the YouInvest platform. You can access the full list here.
