Most popular investment trusts – November 2018

After the tech sell-off, investors have rushed towards global tech trusts now trading on bigger than usual discounts. 

Funds and Investment Trusts December 5, 2018 by Tom Bailey

Whether during the seemingly unstoppable popularity of US tech in the summer of 2018 or during the sector’s heavy sell sell-off this autumn, Scottish Mortgage has managed to keep its position as the most popular investment trust among investors of interactive investor, Money Observer’s parent company.

The global technology focused trust once again topped the popularity league tables, being the most bought investment trust in November.

Already known for its solid returns (gaining 80% over the past three years), the heavy sell-off of tech stocks in October helped bring the trust’s premium down to almost par, currently 0.1% on 3 December, according to broker Winterflood. In contrast, its average premium figure stands at just over 2% over the past year.

It is a similar story for Allianz Technology trust, which kept its place as the third most popular trust. With a focus primarily on US tech (it holds 80% of its portfolio in the US, compared to Scottish Mortgage’s 56%), Allianz was hit even harder by the tech sell-off. That created a buying opportunity for investors that haven’t lost faith in the trust or the sector it invests in. The trust currently sits on a discount of 1.9%, compared to its 12-month average premium of 0.04%.

For similar reasons, Polar Capital Technology trust entered the top 10 rankings, with 75% of its portfolio in US tech equities. The sell-off has helped push the trust’s discount to 4.2% versus a 12-month average of 2.2%.

Also finding itself back in the rankings after a period of absence was Woodford Patient Capital. Despite it being revealed that Swiss fund manager Lombard Odier had a short position on Woodford Patient Capital, the trust has seen a potential turnaround. Since March the trust’s value has risen by a fifth, meaning it will likely to be re-included in the FTSE 250 later this month, following the quarterly reshuffle. The trust, however, is still down almost 10% over a three year timescale.  

Fidelity China Special Situations worked its way up the rankings in November, rising by five places from ninth to fourth. Chinese equities have performed poorly so far this year, the result of China’s deleveraging campaign, which is in turn slowing its economic growth. Moreover, the US/China trade war has also hit the region. But, on a positive note, fears over the trade war sharply receded in November during the build up to the G20 meeting between the presidents of both the US and China.

For the first time, Baillie Gifford UK Growth has appeared in the rankings. The trust, previously managed by Schroders, was taken over by Baillie Gifford earlier in the year. While the trust has yet to prove itself under its new management, the reputation of Baillie Gifford appears to have attracted investors.   

Finally, the Smithson investment trust rocketed up to second place in November, following its launch in October. The trust’s IPO was the largest for any investment trust in UK history, raising over £800 million (Woodford Patient Capital previously held the title). As with Baillie Gifford UK Growth, its popularity among investors is on the back of its management’s reputation.

Investment trust Sector 1-month (as of December 4 2018) 3-year price return
Scottish Mortgage Global 3.90% 80.38%
Smithson Global Smaller Companies -1.15% n/a
Allianz Technology Sector Specialist: Tech Media & Telecomm 2.22% 115.29%
Fidelity China Special Situations Country Specialists: Asia Pacific 5.79% 48.03%
Baillie Gifford UK Growth UK All Companies 0.59% n/a
City of London UK Equity Income 0.50% 4.54%
Baillie Gifford Shin Nippon Japanese Smaller Companies 16.44% 125.57%
Finsbury Growth & Income UK Equity Income 2.89% 35.17%
Woodford Patient Capital UK All Companies 0.66% -9.96%
Polar Capital Technology Sector Specialist: Tech Media & Telecomm 3.56% 93.66%

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