The Covid-19 sell-off in March 2020 was one of the steepest nose dives in markets on record and for many it was a major buying opportunity to load up on names that could lead the rally out of the Covid crash.
But while some of the most-popular stocks during that time have continued to soar, others have failed to make the sort of returns investors would have hoped for at the time.
As such, Trustnet looked at the most-bought UK and overseas stocks between January and June last year, looking at which companies investors piled into during the initial market crash and rally.
Data provided by interactive investor (ii) revealed that investors generally sought comfort in globally recognisable brands, cashing in on the chance to pick up big names at a cheaper price.
Source: FE Analytics
In the UK, banks were a popular choice along with oil giants Royal Dutch Shell and BP, all of which were strong performers prior to the pandemic. These were among the most severely hit during the sell-off and investors were quick to assume they would rebound strongly once the worry was over.
Conversely, the Scottish Mortgage Investment Trust also made the list. The world’ largest investment trust proved popular with investors, who took its market capitalisation to above £9bn. It invests in other names on the list, such as Moderna – the trust’s biggest holding, – which many viewed at the time as clear Covid winners.
Source: Interactive Investor (ii)
On the overseas side, investors also sought comfort in globally recognisable names, mainly favouring the technology sectors.
Tesla was the most popular overall as the electric car manufacturer cemented itself as a mainstream car maker rather than niche electric vehicle manufacturer. The majority of the big tech names were popular with investors, with Apple, Microsoft, Alphabet, Shopify and Netflix appearing on the list.
Zoom was one of the biggest investment stories in 2020 as people rushed to set up its video conferencing technology as the world adapted to new working from home measures.
Famed fund manager Warren Buffett’s firm, Berkshire Hathaway, made the list, with investors seeking out comfort in one of the industry’s most well-known names.
Since the start of 2020 the company has made investors 26.1%, although it would have taken time to come through, as much of those returns were made in 2021.
Not all companies have been as successful, however. UK airline easyJet for example has lost investors 11% so far this year, and the share price is 68.8% lower than its January 2020 price.
easyJet share price year-to-date
Source: FE Analytics
Airline stocks have continued to struggle this year as international travel faced several headwinds such as extended lockdowns and the increased cost of travel with required testing and quarantining putting many off travelling still.
EasyJet did receive an initial boost to its share price when Covid restrictions were lifted but generally it has struggled to overcome the above headwinds.
Aston Martin has also fallen off in 2021, impacted by the decline in UK car sales. Data from the Society of Motor Manufacturers and Traders (SMMT) found that UK car sales fell year-on-year for the fourth consecutive month, declining 24.6%.
Aston Martin share price year-to-date
Source: FE Analytics
People have bought fewer cars as there was a lack of need during the pandemic. Since the end of lockdown, semiconductor supply chains issues have pushed up the prices and, combined with environmental concerns, many buyers have sought out electric cars – something Aston Martin does not sell.
Biotechnology company Novacyt has also suffered a downturn in performance this year, triggered by the Covid vaccine being announced last year.
The company supplied Covid tests for the NHS, which boosted it during the pandemic, but on the day the Covid-19 vaccines were announced last November the company’s share price halved.
Novacyt share price year-to-date
Source: FE Analytics
At the time Lee Wild, head of equity strategy at interactive investor, said it was because many assumed that an effective vaccine would wipe out the need for mass testing, sending investors into the vaccine stocks like Pfizer and AstraZeneca instead.
Not all of 2020’s popular stocks have been disappointing year-to-date. Investors in BP, Royal Dutch Shell, Barclays and Natwest for example have all had positive returns so far this year. All of these companies fall into the cyclical area of the UK market, which has benefited from general the shift into a value bias, also triggered by the vaccine rollout.
When the vaccine was announced markets began forecasting a recovery period with a path out of the pandemic, an environment that benefited unloved stocks.
Many of these companies are also popular dividend options, a sector that has undergone a massive recovery from the initial Covid sell-off, data from the latest Link UK Dividend Monitor found.
It said UK dividends had risen £34.9bn in the three months between July and September, up 89.2% year-on-year. UK banks were only allowed to restart its dividend payments earlier this year with other cyclical stocks able to restart payments once cash flows picked back up to a sustainable level.
On the overseas side US tech stocks maintained their pre- and during-pandemic outperformance with the lockdown accelerating many of the pre-existing themes benefitting these companies.
Tesla has had a 46.5% increase in the share price this year, slightly muted compared with the 700% in 2020, but still a high growth compared to others. Shares in Alphabet and Microsoft have made at least 70% and 51.5% year-to-date as demand for services and tech continues, while Apple has made a more modest 13.4%.
Zoom was one of the victims of the pandemic reopening, however, as hybrid working became the norm and more people turned to its competitors, such as Microsoft’s Teams, for video conferencing needs. Year-to-date its share price has fallen 23%.