What did Morningstar subscribers buy and sell during May?

Sharesight is a portfolio tracker that is integrated into Morningstar Investor. Their data shows the top 20 trades by Morningstar subscribers in May. Sharesight’s data above ranks total trading activity which is split between sells (orange) and buys (yellow).

CSL (ASX:CSL) has regained the top spot for most traded stock in May, while WiseTech maintained the second spot month on month. In terms of direct equities: NextDC (ASX.NXT), Sonic Healthcare (ASX.SHL) and Amcor (ASX.AMC) all saw a significant uptick in trading activity in May. In the ETF space, Vanguard MSCI Index International Shares ETF (ASX.VGS), Global X Semiconductor ETF (ASX:SEMI) and Betashares Australian High Interest Cash ETF (ASX.AAA) all saw an increase in investor activity. Let’s dive into the three biggest investment trends for May and test the narratives against our analysts’ views. But first, here are the key macro influences that impacted investor decisions in May.

Macro trends in May

The ASX200 was unchanged in the month of May as investors face a tightening RBA cycle which is constricting the broader economy. The impacts of higher interest rates have trickled down into the Aussie property market as house prices show signs of deacceleration. As I discussed in last month’s review, higher inflation erodes real returns by reducing purchasing power. The RBA’s monetary tightening to combat inflation changes how investors think about risk.

Potential evidence of this can be seen in a recent shift to income ETF’s such as the Betashares Australian High Interest Cash ETF. Higher rates increase the required return investors demand from risky assets such as shares. This is because the risk-free rate from fixed income increases (think of savings or term deposits).

In May, investors also witnessed a vast number of earnings/trading updates from our wide ASX coverage. Morningstar strategist Lochlan Halloway pointed out that there were 24 fair value downgrades in the reporting season (between April & May). This was more than double the downgrades seen during the same period last year. This suggests the impacts from the US-Iran conflict and monetary tightening is hitting companies where it hurts – the fundamentals.

With this in mind, let’s look at two shares and one ETF that have seen strong trading activity in May and highlight our own analysts views.

NextDC (ASX.NXT)

• Fair Value Estimate: $17 (9% discount at 09 June)
• Rating: ★★★
• Moat: None

NextDC is a leading independent data centre operator with a heavy footprint in Australia. In terms of “pure play” data centre exposure, NextDC stands out as they directly own and operate their data centres. NextDC is expected to benefit from the growing importance of cloud connectivity and AI compute primarily in Australia. Morningstar analyst Dan Baker notes that the Australian market is less penetrated by global companies in comparison to other parts of the world. This has allowed for NextDC to capitalise on the opportunity to be a leader in Australia.

Increased investor interest in May is at least partly driven by the insatiable demand in AI computing. In addition, the company also completed a recent capital raise in late April to help fund data centre growth. While the data centre operator is expected to benefit from industry megatrends, data centres are highly capital intensive. To date, NextDC has invested $3.8 Billion in land and building costs with another $3.4 billion to fit-out the data centres. While NextDC is expected to reap the benefits of these investments over the long term, such high capital expenditure suppresses return on investment.

NextDC is currently trading at a slim discount to our $17 fair value making it fairly valued and does not currently pay a dividend. Looking ahead, Dan expects NextDC to continue to use joint ventures to lower its future capital expenditure and maximise return on equity.

Sonic Health (ASX.SHL)

• Fair Value Estimate: $32 (40% discount at 09 June)
• Rating: ★★★★★
• Moat: Narrow

Sonic Healthcare provides medical testing and imaging services (such as blood tests) to assist doctors diagnose and manage patient health. The increase in investor interest in May can partly be explained by wider sentiment that healthcare has been oversold. ASX Healthcare and Technology shares heavily underperformed in 2025. Despite weaker investor sentiment, Sonic Healthcare outperformed in its February earnings result.

Morningstar analyst Brian Han notes the market may be underappreciating Sonic’s profitability potential over the next decade. Further upside is expected from Sonic’s scale benefits, labour productivity and cost savings from its recent acquisitions. The narrow moat rating is derived from its scale advantages, being the leading private pathology operator in Australia, Germany, Switzerland and the United Kingdom. Sonic Healthcare is materially undervalued, trading at a significant discount to fair value.

Sonic Healthcare shares are down 27% over the past year. This depressed share price has also pushed up Sonic Healthcare’s yield to 5.5% (partially franked).

Vanguard MSCI Index International Shares ETF (ASX.VGS)

Morningstar Medallist Rating: Gold

Vanguard MSCI Index International Shares ETF mirrors the MSCI World ex Australia Index. The MSCI World ex Australia collects the top stocks across 22 developed markets and weights them by market cap. Morningstar analyst Liem Nguyen notes that market weighting naturally adjusts to security price changes without frequent rebalancing, generating lower trading costs. Alongside lower fees, these index ETF’s gain a long-term performance advantage over most actively managed peers.

The increase in trading activity in this ETF makes sense given Morningstar’s Gold rating and the growing adoption of ETFs as a portfolio staple. The specific international exposure allows Aussie investors to gain easy access to the largest international companies. Our manager research team notes this ETF strategy stands to be among one of the best choices for global market exposure. The efficacy of passive management in global markets, its cost-efficient availability and broad diversification continue to be key drivers that earn Morningstar’s conviction. Overall, the long-term effectiveness of passive products and index tracking capability of Vanguard make it an appealing pick in global equities.

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