Discover the most popular countries and regions with AJ Bell fund investors

When it comes to the most in-demand region or country with AJ Bell DIY fund investors, there’s a clear winner. Out of the top 100 most widely held funds, investment trusts and exchange-traded funds on the AJ Bell platform with a specific regional or country focus, the US dominates by some distance.

Some 17 out of the 41 products in this category are focused on the world’s largest stock market. Its sheer size and outsized performance in recent years make it an obvious destination for investors.

Why the US is so popular

Just because the US market is home to the world’s largest companies doesn’t mean returns are guaranteed – even the most valuable stocks can come a cropper. But what you can count on is that America’s stock market is awash with great companies, including many of the global stock market’s leading lights.

While most of the US-focused products favoured by AJ Bell customers offer broad-based exposure to Wall Street, such as through the S&P 500, it is interesting to note there are three vehicles which are equal-weighted.

Most stock market indices are weighted according to market valuation, which means the largest stocks have the biggest impact on movements in the index. An equal-weighted index, as the name suggests, is constructed so all the constituents have the same weighting.

The appearance of these equal-weighted products suggests concern among some investors about how dominant big technology and AI-related stocks are in US indices. As well as these equal-weighted options, there are also some US funds which focus on specific stock market sectors in the most-popular list.

As is the case for all the regions and countries which feature in the top holdings list, most products offer passive exposure with just a few actively managed exceptions; demonstrating a clear preference for the simplicity and lower costs associated with trackers. The most widely held of the US active vehicles is Artemis US Select Fund which focuses on large-cap growth names and has a concentrated portfolio of 50 holdings.

UK-focused funds still in demand

While overseas exposure, in particular broad global exposure, is clearly front of mind for many investors looking to diversify by geography; funds, trusts and ETFs centred on the UK stock market still have a place in many investors’ portfolios. Nine of the products in the list have a domestic focus.

This makes sense given people are often more comfortable investing in what they know, and the UK market is packed with household names which many Britons interact with every day.

Again, most are trackers which simply look to replicate the performance of the market, with a bias towards large cap stocks, the only exceptions being the income-focused investment trust City of London and Jupiter UK Dynamic Equity Fund.

In February this year City of London became the first investment trust to increase its dividend for 60 consecutive years, helping to explain its popularity among income seekers. Jupiter UK Dynamic Equity Fund focuses on businesses which are involved in turnaround situations.

More opportunities abroad

Regional European funds are the next most popular with six relevant vehicles. Two of these are active funds: BlackRock European Dynamic Fund, which looks to blend growth and value investing styles, and Liontrust European Dynamic Fund, which looks for discounted names which generate strong cash flow.

The world’s third largest stock market, Japan, has four products in the top 100 as investors look for exposure to one of the best performers globally over the last few years. The headline Nikkei 225 index having surged ahead after finally breaking above its longstanding all-time high achieved in the 1980s in February 2024.

There is clearly an appetite for emerging markets exposure as investors look to tap into the demographic trends driving developing economies including growing middle classes and large working age populations. Alongside vehicles which track broad-based emerging markets indices there are two products focused on two of the largest markets in this category: China and India.

The Jupiter India Fund is actively managed, with lead manager Avinash Vazirani applying a growth at a reasonable price approach when selecting investments for the portfolio. The China product is Franklin Templeton ICAV FTSE China UCITS ETF, a passive option which tracks an index of large and medium-sized Chinese companies.