UK equity managers piled into consumer goods companies and healthcare names during the first half of 2020 as the Covid-19 pandemic took hold, while appetite for oil & gas giants Royal Dutch Shell and BP plummeted, according to FE Analytics.
Having previously looked at changes in the UK equity income space, Trustnet found out which stocks in the broader UK All Companies sector saw significant changes in the ownership during 2020’s tumultuous first half.
As such, we looked for the stocks in funds' top 10s that saw the greatest change in ownership – as a percentage of the sector – between 31 December 2019 and 30 June 2020.
And as the below chart shows, there have been some clear winners from the pandemic and others that have struggled as the impact of Covid-19 took hold.
Source: FE Analytics
In the UK All Companies sector, one company stands out as a clear winner during the first half of the year: Reckitt Benckiser Group.
The consumer goods company – which specialises in health and cleaning products – saw ownership in the sector jump by 11.39 percentage points between the beginning of the year and the end of June, with 15.82 per cent of funds in the sector now owning the stock in their top 10. During that time, the company’s share price has risen by 21.26 per cent.
Price performance of stock during H1
Source: FE Analytics
Consumer goods companies were among some of the few beneficiaries during the lockdown conditions of the first half as households stockpiled and spent more on grocery shopping.
As such, Unilever – with a similar portfolio of well-known health, cleaning and food & drink brands – also saw a strong increase in ownership among UK All Companies funds.
UK equity managers also upped their holdings in drug makers Astrazeneca and Glaxosmithkline, which are the two most popular stocks in the sector held in 29.12 per cent and 34.18 per cent of funds' top 10s respectively.
Astrazeneca, which announced plans to make and distribute 1.3 billion doses of the Covid-19 vaccine being developed at Oxford University, has risen by 10.7 per cent since the start of the year.
It must be remembered too that IA UK All Companies is home to some equity income strategies that do not meet the yield requirements for inclusion in the IA UK Equity Income sector.
As such, its little surprise to find income names such as Rio Tinto and British American Tobacco near the top of the table as dividends in other sectors have come under pressure during the pandemic.
Indeed, the pressures facing some sectors to cut or suspend dividends during the first half was seen among the names that had the biggest reduction in portfolios' top 10s during H1.
Some of the biggest changes in ownership were seen in the oil & gas sector, which has faced a number of challenges this year.
Against a longstanding trend towards decarbonisation, the sector first wintessed an oil price war erupt in February between Saudi Arabia and Russia, which led to crashing prices. This was immediately followed by the declaring of the pandemic and lockdown conditions that have halted economic growth.
Tougher operating conditions prompted Royal Dutch Shell to announce its first dividend cut since the second world war and resulted in a fall in ownership in the sector of 14.87 percentage points during the first six months.
The same bearish outlook for the oil & gas industry and concerns (realised on 4 August) that BP too would have to reduce its dividend saw UK fund managers cut holdings in the stock.
During the first six months, Shell saw its share price fall by 42.42 per cent while BP was down by 34.86 per cent.
Price performance of stocks during H1
Source: FE Analytics
Another challenged industry in the UK was the banking sector, which was effectively ordered to stop paying dividends, curb executive remuneration and halt share buybacks by the Bank of England amid concerns over liquidity during the pandemic and a re-run of the earlier financial crisis.
As such, a number of the UK’s best-known banks saw greater reductions in ownership in the sector, with Lloyds Banking Group and HSBC among the worst hit.
Similar pressure from the regulator on the insurance sector resulted in a fall in ownership for Legal & General Group.