What are the top 10 stocks bought by global fund managers?

What are the top 10 stocks bought by global fund managers?
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Stock trading continues to hit all-time highs in 2022 with £127bn worth of shares changing hands on the London Stock Exchange only in March. Investors have begun to reposition their portfolios after tech stocks’ long bull run finally came to an end. Stock markets have also been affected by the rise in interest rates to combat inflation, currently at its highest level in 30 years, and geopolitical uncertainty.

However, there are still opportunities for investors. John Husselbee of Liontrust Asset Management comments that “In a reflationary environment, we expect the rest of the world to outperform the US stock market, value stocks to outperform growth, and small caps to outperform large.”

Let’s see what we can learn from the stocks that professional fund managers are currently buying for their portfolios.

What are the most popular global stocks chosen by fund managers?

According to TrustNetThese are the most purchased stocks by global funds in the last three months (as of February 2022).

Position

Company and ticker

headquarters and sector

1

Rio Tinto (RIVER)

United Kingdom, Mining

two

British American Tobacco (BATS)

United Kingdom, Tobacco

3

AstraZeneca (AZN)

United Kingdom, pharmaceuticals

4

Glencore (GLEN)

UK/Switzerland, Mining

5

UnitedHealth Group (UNH)

USA, Health

6

HSBC (HSBA)

United Kingdom, Banking

7

Anglo American (AAL)

United Kingdom, Mining

8

HSBC European Index (C Acc)

index fund

9

MasterCard (MA)

United States, Banking

10

KDDI Corporation (KDDIY)

Japan, Telecommunications

Trustnet’s Eve Maddock-Jones comments that “Hardly any growth stocks made the list as investment style has given way to value during periods of high inflation and interest rates.” She adds that this “tends to favor higher value cyclical sectors such as financials, mining and energy.”

Although most of these companies operate internationally, it is interesting to see the dominance of UK-based companies. Mislav Matejka from JPMorgan Asset Management highlights that UK equities have lagged 50% behind the US and 24% behind the eurozone since the Brexit referendum. After years of caution, JPMorgan has upgraded UK shares to “overweight”, saying they are now trading “at a record discount”.

Let’s take a closer look at the three most-bought stocks.

1. Red River

Rio Tinto is the second largest mining and metals company in the world, behind BHP. The Anglo-Australian company recently reported excellent results, with a 72% rise in underlying earnings. Its results were boosted by higher iron ore prices and a post-pandemic recovery in demand from China.

Rio Tinto also paid record dividends in 2021, with an average dividend yield of more than 10%. It currently trades at a relatively modest price-earnings ratio of 6.1, compared to 17.5 for Glencore and 11.4 for BHP.

According to Sharecast, analysts’ recent 12-month share price forecasts range from a low of 5,300 pence to a high of 6,460 pence. With a current share price of just under 6000 pence, there appears to be downside risk as well as upside potential.

2. American British Tobacco

British American Tobacco (BAT) is one of the world’s largest tobacco companies, selling its products in more than 180 countries. It has generated modest but steady growth in revenue and earnings for the past five years. While demand for traditional cigarettes is falling, BAT achieved 50% revenue growth on its vaping products in 2021.

BAT recently announced a £2 billion share buyback program due to the cash-generating nature of its business. However, Neil Wilson, an analyst at markets.comcommented that “You worry that the buybacks are just a cover for the lack of strategy”.

Tobacco stocks are considered a good hedge against inflation. IG trading platform points out that “its customers are likely to continue smoking, regardless of price increases or pressure on their pockets.”

MarketBeat Reports that most recent brokers share price targets range from a low of 3,100 pence to a high of 4,200 pence. BAT is currently trading at 3,200p, which suggests there is more upside potential than downside. However, BAT will continue to face increased regulation and a lack of appetite from investors and ESG funds.

3. AstraZeneca

Despite being at the forefront of the Covid-19 vaccine launch, AstraZeneca’s share price has been relatively lackluster over the last three years. Hargreaves Lansdown commented that the company’s “promise to sell the vaccine at cost ‘during the pandemic’ means high revenue but not profit.”

However, there are more positive indicators for 2022. The acquisition of Alexion adds the capacity of treatments for rare diseases. This market is less competitive and potentially more lucrative than the major diseases. There are also encouraging signs for AstraZeneca’s treatments for lung cancer, asthma and rare juvenile blood disorders.

The company’s share price has risen 40% in the last 12 months to its current price of just over 10,000 pence. According to MarketBeatRecent broker forecasts range between 10,000 pence and 11,500 pence, suggesting modest upside potential over the next year.

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