Year in Review

When you invest your capital is at risk, the value of your investments can go down as well as up and you may get back less than what you invest.

As the sun sets on 2022 we take a look back at what you invested in

It was a big year for American stocks, especially the tech titans. But a fall from grace at the end of Q1 meant plenty of those firms saw their share prices crumble. Judging these businesses on their long-term value rather than the near-term interest rate environment could be one reason why Freetrade users are holding onto those companies now.

Price corrections are par for the course in markets, and while some stocks may have got cheaper throughout the year, that doesn’t mean investors are giving up on them. Freetrade users are also holding a lot of US and UK ETFs, with the UK slowly rising in popularity throughout the year.

Top 10 Holdings
Freetrade data, 2022

S&P 500 ETFs 25.2%

Tesla $TSLA 24%

All World ETFs 11.3%

Apple - $AAPL 8.7%

UK 100 ETFs 6.2%

Alphabet $GOOGL 5.8%

NASDAQ 100 ETFs 5.4%

Amazon $AMZN 5.3%

Microsoft $MSFT 4.9%

GameStop $GME 3.2%

UK stocks were back on the radar

This year’s biggest mover was a UK wind farm investor. Green energy is still a big favourite with investors but, with clean energy ETFs sliding down the buy list, Freetrade users are being more selective in the companies they’re backing.

With ESG ETFs under fire this year for poor labelling and weak governance, Freetrade users are willing to do the leg work to find investments that they trust are bringing value and adhering to their mission statements too.

Freetrade users got excited about plenty of other UK industries, including grocers, miners and banks. This snapshot reveals a well-diversified picture, and several firms with a history of profitability have proven increasingly appealing to investors seeking more stable returns.

This shows that investors are generally leaning towards firms with longer and more established histories instead of the newer market entrants. However, past performance is not a reliable indicator of future returns.

Biggest Risers (rankings)
Freetrade data, 2022

Same EV company, different month

Well there’s no ignoring the ever-present name at the top of the team sheet. But, beyond Tesla, there’s a more nuanced story behind 2022’s top buys.

US tech is still in vogue but Meta’s path through the buy list shows investors were pouncing on valuation weakness rather than buying into the growth of the past few years. For the rest of the tech gang it’s likely a story of concentrating on the sector’s inherent long-term value and averaging into lower valuations for now.

VUAG slipping down the list reflects a greater attention on selectivity as inflation has become more prominent.

In the same vein, the appearance of XSPS shows investors were anticipating rates hurting the market and chose to hedge their individual stocks by taking a view that the whole index would suffer.

When everything gets hit indiscriminately, it’s a good chance to see which victims are being unfairly punished, that’s been the tale of the second half of the year.

With 2022’s burst of chunky rate rises likely to give way to a less intense trajectory now, 2023 might rekindle the love of US growth stocks, especially if valuations coming down this year start to look too good to pass up. Inflation easing and rates levelling off will probably fire the starting pistol.

Monthly Top Buys
Freetrade data, 2022

Freetrade Fact

NYSE-listed Man Utd is the only publicly traded English Premier League club. But that didn’t stop fans of Arsenal, Chelsea, Everton and Newcastle from searching for their clubs’ stocks on the Freetrade app this year. Now that’s dedication.

North East investors put their money where their mouths are

UK Investing Map
Freetrade data, 2022

Invest in what you know? Maybe that’s why one of the top buys in Llanfairpwllgwyngyllgogerychwyr-ndrobwllllantysiliogogogoch was Google-owner Alphabet.

Glaswegians were thirsty for £BAG. Our data showed that investors in Glasgow bought 50% more shares of Irn Bru maker AG Barr than Edinburgh.

Coca-Cola HBC employs 750 people across the island of Ireland, mainly in Lisburn, NI. Mentos strictly prohibited. Maybe that’s why the bottler was among Northern Ireland’s top 10 favourite stocks in 2022.

South East London bought the most Wetherspoons out of all the London boroughs (practically double the value of East Londoners, in a very far off second place)!

Dispelling the myth that there are more Man Utd fans in London than Manchester, our data showed that Man Utd was a 4x more popular buy among Mancunians than Londoners.

Newcastle invested more in Tyneside-HQ’d Greggs than the whole of Scotland combined. The stock also cracked the top 50 buys in the region but didn’t even make the top 300 in London.

Living up to its hip and green reputation, Brighton was the only region to feature Oatly among its top 10 buys in 2022.

Bristolians traded in the city's iconic car heritage for a much newer model. British EV maker Arrival was the region's second most popular buy.

Freetrade Fact

Even with over 6,000 stocks on your Freetrade app, there were still plenty of searches for private companies which aren’t publicly traded. Here were those top three searches this year:

1. TikTok 2. Brewdog 3. Klarna

Out with the new, in with the old

ETFs can tell us a lot about overall changes in investment sentiment. While the popularity of individual stocks clearly reflects a belief in the business underneath and the people at the helm, an ETF paints a broader picture. What trends and themes do investors believe in? Are they fixated on high-growth opportunities or steady-Eddie income payers?

With inflation soaring and interest rates up, Freetrade users flocked from the thematic ETFs, where risk is often concetrated in one particular sector, towards broader indices spanning multiple sectors instead. US tech fell out of favour as lofty valuations looked less and less appealing against a backdrop of rising rates in America.

The tech-heavy Invesco NASDAQ-100 ETF slipped several spots, while the Vanguard FTSE All-World High Dividend Yield ETF got a boost. The perceived stability and reliability of 'the old' outstripped the glitz of 'the new' in 2022, as mature-stage firms with cash on hand appeared to be a more attractive option for some with mere hopes of cash to come.

Investors were also seeking out dividend-paying ETFs as opposed to growth-centric ones. Their priority seems to have shifted from massive returns to reliable income instead.

That tendency allowed many UK ETFs to rise in the charts, as the rotation from US to UK got underway. An awareness of just how volatile the US was becoming is visible in the Xtrackers S&P 500 Inverse Daily Swap ETF entering the top 500 ETFs for the first time, let alone the top 20.

Most popular ETF buys + year-on-year change
Freetrade data, 2022

1.

Vanguard S&P 500 (Acc.)

VUAG

+1

2.

Vanguard S&P 500 (Dist.)

VUSA

-1

3.

Xtrackers S&P 500 Inverse Daily Swap

XSPD

+45

4.

Vanguard FTSE All-World (Dist.)

VWRL

=

5.

FTSE All-World (Dist.)

VWRP

+2

6.

Invesco NASDAQ-100

EQQQ

-2

7.

iShares Core S&P 500 (Dist.)

ISF

-1

8.

Vanguard FTSE 100 (Dist.)

VUKE

+2

9.

iShares Core S&P 500 (Dist.)

GSPX

+5

10.

Invesco NASDAQ-100 Hedged

EQGB

+3

Most popular ETF buys + year-on-year change
Freetrade data, 2022

1.

Vanguard S&P 500 (Acc.)

VUAG

-1

2.

Vanguard S&P 500 (Dist)

VUSA

+1

3.

Xtrackers S&P 500
Inverse Daily Swap

XSPD

+45

4.

Vanguard FTSE
All-World (Dist.)

VWRL

-

5.

FTSE All-World (Dist.)

VWRP

+2

6.

Invesco NASDAQ-100

EQQQ

-2

7.

iShares Core FTSE 500 (Dist)

ISF

-1

8.

Vanguard FTSE 100 (Dist.)

VUKE

+2

9.

iShares Core S&P 500 (Dist.)

GSPX

+5

10.

Invesco NASDAQ-100 Hedged

EQGB

+3

So what's next for 2023?

1. The UK/US rotation
A nod from the Fed that rate rises will stall or even potentially reverse would likely trigger a flight back to US tech. In the meantime, it’s the stocks with high quality, strong balance sheets, stable margins and low debt that will attract capital, as well as ones who stand to benefit from higher inflation. That could mean investors stick with UK names in large dominant consumer sectors, as well as banks with widening net interest margins and miners benefiting from high commodity prices.

2. True pricing power, who’s got it?
Cash is important and the firms actually generating it become a lot more valuable in the short term. Waxing lyrical about future world domination is all well and good but when recession hits, investors prefer cold hard cash to those hopes and dreams. That’s why large firms with little to no debt, sprawling revenue streams and dominant market positions can stand to benefit. As the market shifts from a ‘growth at all costs’ attitude to one of preservation and reasonable growth, the ones who can raise prices and keep customers on board stand to benefit.

3. Back to bonds?
After being out of favour since the financial crisis, 2023 could mark the return of the gilt. For plenty of investors, this could be their first time dabbling in bonds too. Gilt ETFs offer investors an easy way to dip in and out of government bonds instead of holding them to maturity. Buying and selling a bond ETF is usually a lot faster and easier than trading those underlying bonds themselves. Secondly, a well-diversified bond ETFs should hold a wide range of bonds to mitigate itself from being too heavily influenced by changes in interest rates.

4. 2023: the year ISAs got real
If you haven’t thought about investing tax efficiently, it might be wise to at least work out if a stocks and shares ISA could help now more than ever. The amount we can earn in dividend income and outright investment growth (capital gains) is falling from April 2023. With both allowances being chopped in half, and then again in 2024, it means a lot of investors will find themselves paying tax on their investments for the first time.

Tax to pay on £2,000 in dividends and £12,300 in capital gains


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When you invest, your capital is at risk. Always do your own research. This should not be read as personal investment advice and individual investors should make their own decisions or seek independent advice. ISA eligibility and tax rules apply. Tax relief depends on your personal circumstances and current rules can change. Past performance isn't a reliable indicator of future returns.

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