Investor confidence increased with the stock market in December, with funds being bought in ISAs, junior ISAs (JISA) and lifetime ISAs (LISA), Hargreaves Lansdown (HL) has reported.

As part of its investor confidence survey, HL found that confidence in the UK and Europe increased by 50% between November and December, with Asia Pacific equities also increasing by 30%.

HL also said that its clients in the US had a continued positive outlook, which rallied by 24% in 2023, with confidence in American equities also increasing by 20%.

The firm found that Jupiter India was a prime example of this trade, being the most bought fund across all three ISA wrappers, with India also being the most popular destination for retail investors looking for emerging market exposure.

Tech funds, growth-based US and growth funds feature heavily across the most bought tables all last tables all last year but have edged out money market funds in both the ISA and JISA trades, replaced instead with corporate bond funds, and even specialist AI exposure.

Head of investment analysis at HL, Emma Wall, said: "Money market funds remain a feature of LISAs – presumably for their capital preservation qualities for those who are using the flexible LISA structure to buy a house, rather than build up a pension pot. If this is not the case, then investors should reconsider.

"In a falling rate environment, you want bond funds – witness the near three-decade bull run in recent history – and shares, as the falling cost of capital spurs company spending, rather than cash. Dividends can also offer a real yield (potentially higher than inflation) and a boost to total returns.

"Add to this, there have been missives from the Bank of England (BoE) in October encouraging the money market funds sector to hold more liquid assets to cope with market volatility, and an FCA consultation to enhance the resilience of money market funds, working with the Treasury and BoE, and our view for retail investors is that more sustainable yield can be found elsewhere."

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