Exclusive interactive investor research: Youngest investors biggest winners at the tail end of the year as average portfolio weighting to cash wanes.
We’ve just launched the latest interactive investor Private Investor Performance Index, with data to Q4 2023. This research is essentially a deep-dive into interactive investor (ii) customers’ investment behaviour and any broader trends. And with data now going back four years, it provides a truly unique insight into how private investors have been fairing.
One of the key takeaways from the research is that even when markets are choppy, it is still worth keeping your money invested. Despite having to navigate through some dizzying twists and turns in the investment landscape in 2023, our Private Investor Performance Index shows that the typical interactive investor customer portfolio generated inflation-beating returns that also trumped returns on cash savings.
How have investors been behaving against a backdrop of heightened volatility and uncertainty around interest rates? Our data shows that investors have broadly stuck to their knitting; maintaining well-diversified portfolios, with fingers dipped in different investment pies across the globe.
In what was a volatile year for investments, stoked by high interest rates, elevated (yet slowing) inflation, and geopolitical tensions, among other factors, the youngest investors on interactive investor enjoyed the highest returns at the tail end of 2023, with 18-24-year-olds leading the pack, up 6.4% in Q4 2023 alone.
It was also a positive story for female investors, as interactive investor’s female customers outperformed men over the full four-year time frame (since January 2020, up 14.6 per cent versus 13.5 per cent for men in median terms.) Men and women investing through ii tend to invest along similar lines, as our data shows, but women have a slightly higher weighting to investment trusts.
Our Private Investor Performance Index is published quarterly, and there is plenty of in-depth analysis to get your teeth into. We include portfolio breakdowns in terms of asset classes, (as well as across regions, age, gender), top holdings across various ii customers, and plenty more. The full research can be found on interactive investor’s website, here.
Never a borrower be
UK public sector net borrowing excluding banks hit £7.8 billion, the lowest December borrowing figure since 2019 and around half the same figure from the previous year. Central government debt interest payable also fell significantly, thanks to a reduction in inflation, specifically the Retail Price Index (RPI), which impacts index-linked gilts. The reduction in December’s borrowing is a win for the government, providing some fiscal wiggle room for the Conservatives to potentially cut taxes in this crucial election year. The fall in inflation helps reduce the government’s debt interest costs which jumped on the back of rising prices and interest rates.
Mince pies and much more deliver Premier results
Premier Foods reported Q3 sales up 14.4% thanks to strong demand over the festive season for seasonal products such as Mr Kipling mince pies. The company behind brands like Bisto and Ambrosia has been offering price promotions, which have boosted demand for its products. Premier Foods has also enjoyed a tailwind from falling cost inflation. Cost-of-living pressures have prompted consumers to eat out less, purchasing more food for home consumption instead. Premier Foods’ range of supermarket sauces, cakes, and other treats have enjoyed a boost from this shift as well as consumers’ increased price sensitivity.
Crypto conundrum
Bitcoin shed 16 per cent of its value in just two weeks, briefly dipping below $40k for the first time this year. There was so much excitement ahead of the US regulator, the SEC’s approval of bitcoin ETFs. But its performance since the green light was given has been extremely disappointing for crypto investors. The weakness so far in 2024 comes after an impressive performance last year when bitcoin surged over 150 per cent, contributing around $530 billion to its market capitalisation. Despite last year’s surge, bitcoin is still a long way off its all-time high in November 2021 when its value surpassed $65k.
Victoria Scholar is head of investment at interactive investor