FTSE 100 stocks can be a great foundation for a diversified portfolio. And platform provider Hargreaves Lansdown reckons its private investor clients bought Footsie names with gusto in the last week of July.
FTSE 100 stocks formed the majority of the top 20 of all stocks bought on the platform. And among those I’ve listed below the seven top FTSE 100 stocks bought in order of the number of deals placed by clients.
The number-one purchase was banking company NatWest.
Banks have looked cheap in terms of the valuation numbers for some considerable time. But bank stocks are known to be among the first movers up or down, according to expectations about the economy.
So if investors are buying banks now, my assumption is they expect better economic times ahead.
And that theory is strengthened by knowing that the number-two most-bought UK big-cap was Lloyds Banking.
A turnaround that’s working
Then, at number three, investors bought Rolls-Royce Holdings shares. The business’s turnaround is gaining traction. And the company delivered a robust trading update on 26 July that propelled the shares higher.
However, I reckon there’s more to play for if investors are prepared to invest with a mid- to long-term perspective.
Number four was another bank, Barclays. And at numbers five and six, investors bought financial services companies Aviva and Legal & General.
And like the banks, a purchase of names in the wider financial sector may make sense if the economy’s performance is set to improve.
The number-seven most-purchased was Glencore, the diversified commodity company with production and marketing operations.
The business looks cheap against valuation numbers and there’s a handy dividend to collect. But natural resource stocks may prove to be good investments as world economies improve leading to robust demand.
So it looks like those investors buying Glencore now may be optimistic about the general economic outlook.
However, it’s always important for investors to do their own research and form their own opinions about the prospects of an individual business.
And stocks may prove to be poor investments even if many other investors are buying them.
A skew to the financials
Nevertheless, I see potential in all the names mentioned here. Although there’s a big skew to the financials. But I’d want a portfolio to be diversified with stocks representing several different sectors.
On top of that, this is just a snapshot of one week of buying on one investment platform. But it does seem that investors are optimistic about the ongoing prospects for economies, businesses, and the personal finances of individuals for the coming years.
And I agree with that view and see conditions today as encouraging for a long-term programme of investment in carefully selected stocks and shares.
All shares carry risks as well as the potential for gain. But I’m also mindful of the well-known saying: we’ve got to be in it to win it!
