BP (BP.L) and Legal & General (LGEN.L) were the favorite stocks of Fidelity investors looking to move away from technology funds in August.

The past two months have been particularly challenging for AI-related stocks, as concerns about the sustainability of their growth story led to a rotation out of the highly valued “Magnificent Seven” stocks.

Nvidia (NVDA) lost $278.9 billion (£211.9 billion) on Tuesday, the biggest drop in value for a US stock in history as its share price slumped over 9.5 percent.

Amid fears of a possible recession in the U.S., Fidelity investors diversified their investments away from technology funds and toward defensive strategies in August, data shows.

BP and Legal & General shares were the most popular among ISA and SIPP investors in August, with Aviva (AV.L) coming in third and SIPP clients favoring mining group Glencore (GLEN.L).

As part of the move away from the technology sector, AlphaWave IP (AWE.L) is the only technology stock on the list.

“In August, Fidelity investors demonstrated a shift in their investments, expanding their focus to a broad range of sectors such as consumer goods, technology and industrials,” said Tom Stevenson, investment director at Fidelity International.

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Carnival (CCL.L) benefited from the upturn in cruise tourism and also made it into the top 10 ISA investors in August.

Motorpoint Group (MOTR.L) reflected the strong performance of the used car market despite declining sales and increased pre-tax losses.

For SIPP investors, residential property developer Crest Nicholson (CRST.L) emerged as a new market entrant after it rejected a takeover offer from rival Bellway (BWY.L).

Technology-focused funds, which had dominated Fidelity ISA and SIPP investments for much of the year, saw a decline in investor enthusiasm. The Legal & General Global Technology Index Trust (0P0000XAFS.L), a consistent top seller, saw less interest as investors began to turn to safer, more diversified options.

Stevenson said: “The technology sector has had a remarkable run, but August was a turbulent time. Nvidia in particular has been a key driver of market movements this year. The company, which briefly became the most valuable in the world, saw its market capitalization fall by around $750 billion in July and August, but recovered within a few trading days.”

Stevenson noted a “classic shift towards safety” as investors sought to protect their capital in the face of market volatility. This trend has revived interest in money market funds, with the Royal London Short Term Money Market Fund (0P0000NRQO.L) and Fidelity Cash Fund (0P00018MM4.L) becoming increasingly popular with Fidelity’s ISA and SIPP investors.

The story continues

Read more: British investors flock to Nvidia and passive funds in August

In addition to the pullback from the technology sector, there has been a significant increase in interest in funds focused on global diversification and emerging markets. The HSBC FTSE All Share World Index Fund (0P00013P6I.L) made its debut in the top ten ISA investors, reflecting a growing appetite for broader diversification in economically uncertain times. Emerging market funds such as the Fidelity China Focus Fund (0P0000CO5Z) and Jupiter India Fund (0P0001JKIB.L) also attracted significant attention, suggesting a strategic shift towards regions with growth potential.

Despite the shift away from technology funds, technology-focused mutual funds remain attractive. Polar Capital Technology Trust (PCT.L) maintained strong inflows, securing its position as a top pick for the second month in a row. Allianz Technology Trust (ATT.L) also remained popular with SIPP investors.

Global growth continues to be a key theme for Fidelity investors, with the JP Morgan Global Growth & Income Trust (JGGI.L) attracting strong interest, particularly from ISA investors, due to its diversified approach to investing in high-quality companies around the world.

SIPP investors also showed growing interest in trusts focused on diversification and defensive strategies, with F&C Investment Trust (FCIT.L), one of the oldest investment trusts, continuing to see inflows.

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