Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
With 2023 drawing to a close, the story of this year in investing is becoming clearer.
And, as is so often the case, the reality of what just happened in markets isn’t always the same as our perception of it. With only a few trading weeks left this year we can see that 2023, despite the general gloom that has stalked markets, has turned out to be respectable in terms of returns overall.
The question is - have investors managed to take advantage? Here’s a review of returns in 2023, along with a round-up of where investors actually put their money this year.
The big picture
Below you can see the year-to-date returns on a range of investment assets, correct at time of writing, and the full year returns from 2022 for comparison purposes. Returns are in sterling terms.
At a headline level we can see that 2023 has heralded a significant recovery from falls in the preceding year. In total, nine of the 15 assets tracked achieve a positive return compared to just three in 2022.
| Asset | 2023 year-to-date (%) | 2022 (%) |
| US equities | 14.78 | -7.79 |
| Global equities | 11.31 | -7.62 |
| European equities (ex. UK) | 10.87 | -6.86 |
| Japaenese equities | 9.94 | -5.76 |
| Cash | 4.14 | 1.05 |
| High-yield bonds | 3.88 | -2.31 |
| UK equities | 3.25 | 0.34 |
| Emerging market equities | 0.80 | -9.62 |
| Emerging market debt | 0.79 | -7.42 |
| Corporate bonds | -0.11 | -6.2 |
| Asia Pacific equities | -2.25 | -6.75 |
| Inflation-linked bonds | -3.92 | -12.01 |
| Government bonds | -3.94 | -7.65 |
| Commerical property | -5.76 | -14.88 |
| Commodities | -10.08 | 30.72 |
Source: Fidelity International, 30 November 2023. Datastream: Annualised returns in GBP,from 1.1.23 to 14.12.23.
Please be aware that past performance is not a reliable guide indicator of future returns.
Not all assets are equal in the eyes of investors, of course. You’re much less likely to be holding emerging market debt, for example, than you are US equities. Yet a closer look tells us that many of the most widely-heldassets have enjoyed a strong 2023. Major stock markets in the US, Europe and Japan have performed strongly, helping to recover ground lost last year and driving year-to-date returns for global equities overall to11.31%
The UK has underwhelmed. In contrast to last year, when British shares eked out a positive return despite big falls elsewhere, this time the UK has risen - by 3.25% - but has more lagged other major markets.
A more significant disappointment to investors is the fall for bonds. That government bonds are on track to post anotherloss this year is particularly painful. These are considered the safest bonds and are most commonly used by cautious investors to diversify portfolios.
Cash has been a big story for investors this year, with returns much higher than savers have become used to. Importantly, however, cash has not been able to match the stock market, posting 4.14% gains versus 11.31% for global equities in the year so far.
Overall, investors will be pleased to have posted a positive year after the pain of 2022 - even if many portfolios may not have recovered all the ground lost last year.
How did investors do? The best-sellers
Data on the best-selling investments on the Fidelity platform reveals how investors have played markets this year. The tables below show the 10 biggest net sellers for funds, shares and investment trusts in descending order.
Among funds, it’s naturalfor those aimed at mainstream, global markets - including low-cost index tracking funds - to feature prominently among the best-sellers and that was the case again this year. But there are some interesting additions among the top 10 for 2023.
Cash funds have attracted significant attention from investors with second, third and fourth places being taken by cash or money market funds that produce a cash-like return. There’s some sense in that given the high rates cash has paid. Many will have been glad to bag a risk-free return from cash instead of risk losses on assets like shares.
Had they risked their money on equities, however, it’s likely that investors would’veachieved a higher return.
Funds - Top 10 net sellers
- Fidelity Index World Fund
- Royal London Short Term Money Market Fund
- Fidelity Cash Fund
- Fidelity Funds - Global Technology Fund
- Fidelity Index US Fund
- abrdn Sterling Money Market Fund
- HSBC FTSE All World Index Fund
Source: Fidelity International, from 1.1.23 to 30.11.23
The top 10 sellers among individual company shares reveals investors’ search for income in 2023. Financial stocks have dominated, many of which - such as Legal & General, Barclays and Aviva - have offered attractive dividend yields at points this year.
The list reveals a strong home bias, and a preference for large-cap names. That’s maybe no surprise given these will be the companies most familiar to UK investors but is perhaps a sign that many need extra encouragement to venture into overseas markets where returns - this year at least - have been higher.
Shares - Top 10 net sellers
- Smiths Group Plc
- Barclays Plc
- Aviva Plc
- Lloyds Banking Group Plc
- British American Tobacco Plc
- Phoenix Group Holdings Plc
- Glencore Plc
- Vodafone Group Plc
- 3i Group Plc
Source: Fidelity International, from 1.1.23 to 30.11.23
Income was also a top priority for those buying Investment Trusts. By far the biggest net-seller this year was City of London, a trust which can boast the longest track record of consecutive annual increases to its dividend among all trusts - 57 years and counting.
Beyond that, investors’ appetite was varied with trusts focused on renewable energy, (Greencoat UK Wind), commodities (Blackrock World Mining) and global high-growth (Edinburgh Worldwide) all featuring.
Notable for its absence from the list of biggest net-sellers is Scottish Mortgage, the popular trust with a skew to highly-valued tech companies which suffered dramatic losses in 2022. In point of fact, figures for the biggest gross sales (excluding those selling the trust) show that Scottish Mortgage remains a popular choice for buyers, but the high number of redemptions means it does not feature among the best net sellers. That could mean many of its backers lost patience in 2023 and sold out.
Investment trusts - Top 10 net sellers
- City of London
- Greencoat UK Wind
- Edinburgh Worldwide
- Murray International Trust Plc
- BlackRock World Mining Trust Plc
- Alliance Trust
- The Merchants Trust Plc
- Henderson Far East Income Limited
Source: Fidelity International, from 1.1.23 to 30.11.23
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Overseas investments will be affected by movements in currency exchange rates. The value of shares may be adversely affected by insolvency or other financial difficulties affecting any institution in which the Fund's cash has been deposited. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Direct shareholdings should generally form part of a well-diversified portfolio of other investments. Shares in investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. They can gain additional exposure to the market, known as gearing, potentially increasing volatility. This fund invests more heavily than others in smaller companies, which can carry a higher risk because their share prices may be more volatile than those of larger companies. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
