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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

What stocks are IG investors buying in their stocks and shares ISA?

The new 2021/22 tax year provides the opportunity to add £20,000 to your stocks and shares ISA. We look at which popular shares and ETFs investors have been buying in their ISA with their new allowance.

What stocks are IG investors buying in their stocks and shares ISA?

Coinbase, Tesla and Palantir have been the most popular stocks

The UK’s path to economic recovery is now clearer given its successful Covid-19 vaccination programme. At the time of writing, the UK has administered 64 vaccine doses per 100 people across the total population which has helped investor confidence in UK equities surge since the start of 2021. The FTSE 100 index has risen 8% while the FTSE 250 index is up 10% since the turn of the year.

Investor’s enthusiasm for stocks has been reflected across global markets, with US and European indices also rising by similar magnitudes.

So, given the recent equity market rally, what have investors been buying in their stocks and shares Individual Savings Account (ISA)? The chart below maps the equities that have been bought the most in ISA accounts by IG clients, since the start of the new tax year to 17 April 2021.

Figure 1: top 50 equities bought in IG ISA accounts (6 April – 17 April 2021)

Source: IG

Coinbase Global Inc

Investors certainly seem to be excited by the recent listing of Coinbase Global (COIN), the largest US cryptocurrency exchange, which first sold shares to the public on the 14 April. Even with Coinbase being listed for just three out of the nine trading days covered in our analysis, the crypto-firm was still the most purchased stock amongst IG ISA investors, by a substantial margin too.

Following the astronomical rise in crypto-assets since the start of the year, Coinbase saw its revenue jump up to $1.8 billion in first quartner (Q1) 2021. For context, it generated $1.3 billion in revenue in the whole of 2020. The exchange has approximately 56 million verified users and holds around 11.3% of the whole cryptocurrency market capitalisation on its platform.

Analysts, such as Larry Cermak, research director at The Block, have indicated that Coinbase’s share price will have a strong correlation with bitcoin, thus it could be a proxy for people to invest in bitcoin within an ISA wrapper. Although, Coinbase co-founder, Brian Armstrong, suggested that investing in Coinbase shares is more like an index bet on the crypto space more broadly, alluding to the fact that they have over 100 crypto-assets available on their exchange. That said, 41% of trades are thought to be on bitcoin, down from 58% in 2019.

Before Coinbase’s initial public offering (IPO) listing, the Nasdaq placed the stock a reference price of $250 per share but the share price has since soared to as high as $342.85 before falling back to $311.92 on 21 April.

Tesla Motors Inc

As expected, Tesla Motors (TSLA) continues to be one of the most popular stocks. The majority of analysts remain bullish on the electric car company with 43% maintaining a buy rating. The remaining 57% is split evenly between holds and sells. That said, the 12-month consensus target price currently sits at $628.61, below its recent close at $744.12 on 21 April.

Tesla shares slid recently following a fatal car crash, which killed two people, while reportedly using the Tesla Autopilot system. Investigators are still trying to determine if one of the individuals was driving the car or if the autopilot system was in use, although it is said that investigators are '100% sure' no-one was driving the vehicle at the time of the accident. At the time of writing, an official announcement has yet been made.

Palantir Technologies Inc

Palantir Technologies (PLTR) is a software company that builds platforms for integrating, managing and analysing big data. The firm has a wide variety of clients which ranges from counter-terrorism agencies, hedge funds, health services and also companies within the materials industry. More recently, they have signed contracts with the National Health Service (NHS) to support its Covid-19 efforts as well as being awarded a $44.4 million contract from the US Food and Drug Administration (FDA) in December 2020.

Within its full-year (FY) 2020 results announced in February, the software company revealed it generated $1.1 billion in revenue, up 47% year-on-year (YoY), and expects quarterly revenue to rise by 45% in Q1 2021. Although the firm suggested that annual YoY revenue growth could decline, Palantir have projected its revenue will hit $4 billion in FY 2025 which equates to a 30% compounded annual growth rate. These strong results prompted an upgrade from Goldman Sachs from neutral to buy, whilst upping its price target from $13 to $34.

88 Energy Ltd

88 Energy (88E) shareholders have been on a roller coaster of a ride over the last few months, as can be expected when investing in an oil exploration firm. The Alternative Investment Market (AIM)-listed stock saw its share price soar by 762% to 4.05p in March as the firm reported positive testing results at its Merlin-1 well in Alaska.

Figure 2: 88 Energy Ltd market capitalisation and share price

However, the price dropped as quickly as it rose due to operational issues that prevented further tests being carried out from two of its most prospective zones. Unfortunately, it was considered too late in the season to carry out further testing forcing them to pull out, although the well could be re-entered in the future.

Investing in exploration companies is inherently risky, as demonstrated by the volatility in 88 Energy’s share price. Potential investors should fully understand the risks involved in buying into a speculative stock such as 88 Energy.

ETFs are popular for building portfolios

We have also seen IG customers use exchange traded funds (ETFs) to build a diversified portfolio in their stocks and shares ISA. Some interesting thematic ETFs have also proved highly popular since the start of the tax year.

Looking at index-tracking ETFs, Vanguard’s S&P 500 (VUSA), iShares Core FTSE 100 (ISF) and also the Vanguard/iShares FTSE 250 (VMIG and MIDD) proved to be favoured amongst IG clients.

Interestingly, a significant proportion of clients purchased Xtrackers FTSE 100 Short Daily Swap (XUKS), which aims to deliver the inverse performance of the FTSE 100. An important note here, is that, due to the daily return element, inverse daily ETFs are not designed to be held long-term. You can read more on why this is the case here.

Figure 3: top 20 ETFs bought in IG ISA accounts (6 April – 17 April 2021)

Source: IG

iShares Global Clean Energy

iShares Global Clean Energy ETF (INRG), which is the largest broad clean energy ETF with $5.4 billion assets under management, saw the most buys out of all of the thematic ETFs available on the IG platform. This, perhaps, is not that surprising considering the colossal growth in popularity for ESG ETFs. In 2020, assets in ESG ETFs grew to $174 billion, up nearly 200% from 2019, according to the Financial Times.

Looking at iShares Global Clean Energy ETF specifically, it is important to look at the underlying holdings to understand what you are actually investing in. The top ten holdings, in terms of weighting, can be found in the figure below.

Figure 4: iShares Global Clean Energy ETF top ten holdings

Share Weight (%)
Vestas Wind Systems AS (VWS) 7.9
Orsted AS (ORSTED) 6.2
Enphase Energy Inc (ENPH) 5.6
Xcel Energy Inc (XEL) 4.5
Iberdrola SA (IBE) 4.4
NextEra Energy Inc (NEE) 4.3
Enel SpA (ENEL) 4.3
Plug Power Inc (PLUG) 3.8
SolarEdge Technologies Inc (SEDG) 3.7
SSE PLC (SSE) 3.0

One of the holdings within the top-ten, Plug Power, has been the main contributing factor to the poor year-to-date returns for the ETF overall. This is as, Plug Power has fallen sharply as the firm announced that auditors discovered accounting errors within their 2018-2019 fiscal results as well as some more recent quarterly statements. iShares Global Clean Energy ETF has returned -38% since the start of 2021 (as of 21 April).

VanEck Vectors Video Gaming & eSports

The rise of the video gaming and eSports industry has been well documented over the past few years. We have seen it grow from a small niche subset of sports into a $174.9 billion industry.

Traditionally, video gaming has been perceived to be popular amongst children, but this is certainly not true with a high proportion of adults who grew up gaming participating in the industry. In fact, it is estimated that 65% of American adults currently play video games.

IG recently interviewed JP Lee, ETF product manager at VanEck, on our IG Trading the Markets podcast. Lee discussed the different subsets of the industry and highlighted that the low cost of entry within the mobile space has enabled the size of the market to explode as it has enabled users in emerging markets to also participate in gaming.

Lee also discussed the changing dynamics of revenue streams; switching from a traditional one-time game purchase to in-game cosmetic items and subscriptions. An example of this is Fortnite, which is free to download but generated revenues of $2.4 billion at its peak in 2018 through in-game purchases.

Lee predicts that we will see a lot of mergers and acquisitions (M&A) activity within the industry and this should help fuel future growth. A recent example of this would be Electronic Arts (EA) acquiring Glu Mobile (GLUU) for $2.4 billion, which immediately doubled the firm’s mobile presence.

You can listen to the full IG Trading the Markets podcast here.

You can invest in any of the equities mentioned within this article, as well as over 10,000 shares available on the IG share dealing platform, from as little as £3 per trade.

  1. Open a share dealing account. You can open an IG account within a few minutes.
  2. Fund your account. Our minimum deposit is £250.
  3. Place your first trade. Open our platform and trade over 10,000 shares available through IG.

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Publication date : 2021-04-30T09:02:56+0100

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