The sector joined others such as global, Europe ex UK, specialist and Asia Pacific ex Japan as one of the most popular investment areas for the platform’s one million individual investors this year.
Demonstrating the popularity of the small cap sector, both the Marlborough UK Micro Cap Growth and Standard Life Inv Global Smaller Companies funds were among the top 10 best-selling via the Hargreaves Lansdown platform.
However, the rest of the UK fund market suffered from the uncertainty caused by ongoing Brexit negotiations and weak economic growth compared with the rest of the world.
The UK All Companies and UK Equity Income sectors ranked among the least popular sectors for investors in 2017, closely followed by North America, North American Smaller Companies and Property.
Hargreaves senior analyst Laith Khalaf said: “Overall it’s been a good year for investors, with global stock markets forging upwards, despite the tightening of monetary policy conditions, particularly in the US.
“However, fund buyers have shunned the UK stock market, which is normally the first port of call for domestic investors.
“UK smaller companies funds don’t appear to have been tainted with the same brush as their large cap cousins however, and still remain a popular choice for DIY investors.
“This may reflect the higher appetite for risk among small cap investors, or the perspective that the performance of smaller companies is often more dependent on what’s going on in the individual businesses, rather than the economy at large.”
On a stock level, the likes of Lloyds, BT, ITV and Dixons were among the most popular stocks bought in 2017, while the housebuilders suffered.
Taylor Wimpey, Berkeley Holdings, Barratt Developments, Persimmon and Rolls Royce were all among the shares investors most wanted to sell.
