US stocks continue to be in demand for UK investors as they dominated the most-bought equity investments in December, according to data from Interactive Investor.

The platform has revealed its most-bought equities, funds, and investment trusts from last month, with US-based companies MicroStrategy, Tesla, and Nvidia topping the list for the most-bought stocks.

New entrants to the top stocks list included the US-based firms Palantir Technologies and Advanced Micro Devices.

While passive funds continued to be popular, taking nine of the top 10 most-bought fund spots during the month, an active fund topped the list: the Royal London Short Term Money Market fund.

Royal London’s money market fund overtook the Vanguard LifeStrategy 80 per cent Equity fund, which dropped to third place, with the Legal & General Global Technology Index in second place.

“Interestingly, the two most popular funds last month offer almost opposite investment propositions,” noted Interactive Investor fixed income lead, Sam Benstead.

“Top-ranked Royal London Short Term Money Market gives investors a ‘cash-like’ return, which closely follows the Bank of England base rate.

“Money market funds are one of the most conservative options that investors have to choose from but, with a yield of 4.8 per cent, returns are comfortably ahead of inflation, which helps explain its popularity.

“In contrast, second-ranked Legal & General Global Technology Index is a full-on growth fund, which has delivered stellar returns but with plenty of volatility.

“The £3.6bn fund is not for the faint-hearted, with around 15 per cent invested in each of Apple, Nvidia and Microsoft, but this concentration in US tech stocks has made it one of the best-performing funds of the last decade, returning an astonishing 655 per cent."

The funds list also saw a new entry in December – the UBS S&P 500 Index, while Fundsmith Equity did not appear on the list for the third month in a row.

Meanwhile, in the investment trust space, Scottish Mortgage regained its spot as the frontrunner on Interactive Investor’s most-bought investment trusts, having fallen to second place in November.

It was followed by Greencoat UK Wind, JP Morgan Global Growth & Income, Alliance Witan, and F&C Investment Trust.

“December marks the end of a mixed year for investment companies, during which the issue of share price discounts to net asset values (NAVs) did not dissipate, merger activity was rife and high-profile activist investors made their appearance on a number of share registers,” commented Interactive Investor fund analyst, Alex Watts.

“Given strong performance of global equities through 2024, it’s no surprise that in December investors maintained their vigour for global trusts, continuing to buy two large multi-manager options: F&C Investment Trust and the newly merged Alliance Witan, in addition to the strongly performing JPM Global Growth and Income and growth-focused Scottish Mortgage.

“Investors also sought specific sector exposures. The tech sector delivered fantastic returns for a second year running in 2024, despite some shakiness in the last week of the year.

“It’s not just conventional equity trusts that were popular though. Investors showed continued enthusiasm for some alternative exposures within the renewable energy infrastructure sector, NextEnergy Solar and Greencoat UK Wind as well as the infrastructure giant that is 3i.

“While UK equities have been out of favour of recent, the £2.2bn City of London trust remains a popular option. The trust is managed by Job Curtis and offers a yield of just shy of 5 per cent by investing mainly in UK-listed companies, with a record of increasing its dividend for more consecutive years than any other UK trust.”

Commenting on the most bought stocks, Interactive Investor equity analyst, Keith Bowman, said: “US companies remained firmly in demand by UK investors during December, buoyed by their continued longer-term outperformance of UK companies and markets.

“Bitcoin exposed MicroStrategy stayed in favour as investors once again sought exposure to the cryptocurrency. Hopes for Tesla, given Elon Musk’s close relationship with President-elect Trump, stayed high, while the AI theme and chipmaker Nvidia’s considered exposure left it further in demand.

“Palantir Technologies made a new entry. Shares for the software provider, which looks to improve the efficiency of customer data, remained something of a momentum play, climbing over 300 per cent during 2024.

“British Airways owner IAG also made a new entry. Self-help measures and exposure to the US economy helped its shares soar over 90 per cent during 2024, with investors appearing to remain optimistic for 2025 prospects.”

---