What happened in the markets and where did AJ Bell customers invest in November 2023?

November was good for equities, with the S&P 500 index in the US having its best month so far in 2023. The US index increased by 8.9% and the more tech-heavy Nasdaq Composite rose by 10.7%.

UK mid-cap stocks did well as the FTSE 250 advanced by 6.7% in November, significantly ahead of the 1.8% from the FTSE 100 index of larger companies.

Propelling markets higher was a shift in investor sentiment thanks to lower-than-expected US inflation figures fueling the argument that the Federal Reserve no longer needs to keep raising interest rates. Eurozone inflation for November was also lower than expected, giving support to European stocks. These events have increased investor appetite for riskier assets which includes equities.

10-year gilt yields fell from around 4.4% to 4.15% during the month as interest rate expectations changed. In the US, Treasury yields declined from 4.66% to 4.3%.

Infrastructure-related companies were among the worst hit from the sharp rise in interest rates in 2022 and earlier this year as higher rates lower the present value of future cash flows. Therefore, it is understandable why they have been one of the first places that investors have sniffed around for bargains as the narrative shifts from rate rises to potential rate cuts. For example, HICL Infrastructure jumped by 14.9% in November.

Market movements in November 2023

Top risers in November 2023

Data sources: SharePad, LSEG

Most popular stocks with AJ Bell customers in November 2023

BUYS

High-yielding stocks were back in fashion with the likes of investment manager M&G, cigarettes-to-vaping manufacturer British American Tobacco and insurer Legal & General among the most-bought stocks on the AJ Bell platform in November. These three stocks have prospective yields between 8.9% and 9.6%.

The sharp rise in interest rates on savings accounts over the past few years has encouraged people to sell some of their equities and park the money in the bank. However, the tables might be turning once again as investors look for better deals than they can get on cash now that savings rates appear to have peaked.

Moneyfacts’ November UK savings report noted a shift in rates on savings accounts. The average one-year fixed savings bond rate fell month-on-month from 5.42% to 5.36%, the first fall since April 2021, and the average longer-term fixed bond (terms over 550 days) fell from 5.11% in October to 5.02%. Moneyfacts said these were the biggest month-on-month falls since December 2020.

Tesco was the second most-bought stock in November by AJ Bell customers. Data reported on 7 November by Kantar showed that Tesco’s UK market share had gone up to 27.4% in the 12 weeks to 29 October 2023 versus 27% a year earlier. The consensus analyst earnings forecast for Tesco’s financial year to February 2024 has increased by 10% since the summer, with upgrades traditionally being a key driver for a share price.

SELLS

Rolls-Royce was the most-sold stock by AJ Bell customers in November. It has been a top performer on the UK market this year, rising 192% so far in 2023 amid investor excitement about a new CEO coming in to try and fix the business. Tufan Erginbilgiç has taken a non-nonsense approach and has been outspoken about the problems found.

Approaching a year into the job, the CEO has now set out ambitious targets including a goal to quadruple profits in the next four years and sell its electric aircraft division. Investors might have taken the view it is better to travel than arrive and locked in profits on the shares when Rolls-Royce announced the growth plan (28 November).

Lloyds Banking was another popular stock sold by AJ Bell customers in the month. The idea that rates might start to fall next year is theoretically bad for the banking sector as it could squeeze their net interest margins – the difference between what they charge on lending and pay out on savings.

EasyJet and International Consolidated Airlines both enjoyed a bit of a share price rally in the first half of November, and the former even rounded the month off by saying it would restart dividends for the first time since 2020. But improved market sentiment towards the airline sector did not stop AJ Bell customers from selling these two stocks in their droves. It might simply have been investors trading the stocks on a short-term basis and selling into the rally.

Investment trusts

BUYS

Extending the theme of investors looking at equities once again for income as cash rates start to ease back, Henderson Far East Income’s near-12% yield clearly resonated with people. This was in the top 10 most-bought trusts in November on the AJ Bell platform, alongside fellow high-yielder Merchants Trust which offers a 5.3% yield from a portfolio of principally UK stocks.

It was interesting to see RIT Capital Partners appear on the most-bought list given its shares have been in a falling trend since late 2021. Now trading on a 24% discount to net asset value versus a regular 5% to 10% premium in the four years pre-pandemic, RIT might have appealed to bargain hunters and investors looking for ways to play the shift in market sentiment by fishing in parts of the market beaten up the most.

RIT had a terrible 2022 with a 14.5% decline in net asset value per share, followed by a further 1% decline in the first half of 2023. RIT’s exposure to unquoted assets put it out of favour with investors, and it also did not help that the trust marketed itself as a way to preserve investors’ capital – which it clearly did not do last year.

SELLS

Whereas RIT Capital was winning over investors, the opposite applied to capital preservation specialists Capital Gearing and Ruffer Investment Company, both appearing on the most-sold list for investment trusts in November.

People typically flock to these types of trusts in times of uncertainty, so it makes sense they would be of less interest in a month when investors start to regain their appetite for risk.

The top purchased or sold shares/investment trusts are based on the number of deals placed by AJ Bell customers in November 2023

Remember that the value of investments can change, and you could lose money as well as make it. How you're taxed will depend on your circumstances, and tax rules can change. These articles are for information purposes only and are not a personal recommendation or advice.