What UK investors are buying, and why


Investing is a strange business. Where we choose to put our money involves a complex calculation: weighing up our biggest fears, our ambitions, our inner beliefs about companies or the world in general, and then translating that into the shares we want to buy.

The top ten companies we bought into last year, therefore, is a very revealing list indeed.
Investment company Hargreaves Lansdown has released its top ten of shares bought through it's technology last year.

1. Aviva

This is the insurance company that owns Norwich Union. It was riding reasonably high until about 6 months ago, when the share price fell through the carpet. Since then it has lost almost a third of its value.

Investors have bought in around the bottom, because they believe that fundamentally it is strong enough to recover. It shows we have faith in the brand, and we have decided that this price constitutes a bargain.

This faith has already been rewarded. Those who bought in at the bottom, have already seen gains of more than 10%.

2. Barclays

This is another financial company that has seen tough times, and its share price has been particularly volatile - it is currently 30% down from 6 months ago but 30% up from three months ago. It has put on almost 10% in the last week.

This has led investors to conclude that if they buy in at the right time they could make a small fortune. Of course, finding the right time isn't easy, but many have taken the chance.

3. BP

The reasons for this purchase have been entirely different, because investors have bought in for a consistent growth story. It has largely bucked the trend of volatility in recent months and has steadily grown for the last year.

It is the sort of company that is continuing to thrive in tough times, as people still need fuel, and it is trading at a premium. Investors also bought in for the dividends, which have been strong and reliable, and an essential component of returns in this environment.

4. Glaxosmithkline

It's another in the BP mould. It has been steadily on the up, and is considered a relative safe haven through a terribly volatile time elsewhere. It is another dividend play and has huge appeal for the relatively risk averse investor.

5. Lloyds Banking Group

It's another financial company which has had an appalling year. The trend downwards has been swift and dramatic. So why are investors flooding in? They have faith. They have decided that a big bank like Lloyds isn't going to fail, and with shares down 60% from a year ago, they think they have a bargain on their hands.

The rest of the top ten tends to fall into one of two camps:

The reliable Joes

Here we have National Grid, Tesco and Vodafone. These have all bucked the trend of performance, because despite the environment we need electricity, food and our mobile phones. The performance has been relatively reliable and the dividends good.

The recovery plays

These include Royal Bank of Scotland and Thomas Cook. Their well-pubicised woes have been matched with massive volatility and huge price falls. Investors have taken the opportunity to buy in at what they see as lows, in the hope that they will profit from a recovery.

So which of these do you like? Which fits your approach to investing, and have you put your money where your mouth is this year? Let us know in the comments.
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