Top 10 most popular investment trusts - December 2017

Funds and Investment Trusts January 17, 2018 by Tom Bailey

Scottish Mortgage IT has kept its position as the most popular investment trust among users of Interactive Investor, Money Observer’s sister-website. Currently trading on a small premium of 2.45 per cent, Scottish Mortgage has seen one year returns of 39 per cent.

The second most popular trust in December was once again Woodford Patient Capital. Managed by Neil Woodford, the fund saw a yearly return of -11.1 per cent. This has largely been the result of a few widely covered ‘bad’ trades made in 2017. Such trades led to some commentators and critics asking if the star fund manager had ‘lost it’ – questions to which he directly responded

However, despite seeing performance dip, many investors still have faith in Woodford, due to the fact that over his 25-year plus career he has beaten the market more years than most. The trust’s current steep discount, of 10.9 per cent, has also drawn investors in, allowing it to keep second place in our investment trust league table. 

In November, Baillie Gifford’s two Japan equity focused investment trusts shot up the rankings, reflective of the increased popularity of Japan. In the latest figures for December, this has somewhat continued. Baillie Gifford Shin Nippon continued this rise in popularity in December, despite its now rather steep premium, coming in at number three. Meanwhile, Baillie Gifford’s other Japan focused trust, BG Japan IT, fell by one place in the rankings. 

TR European Growth continued to decline in popularity, falling to ninth most popular in December. In the previous month’s data, the investment trust, which focuses on European small cap companies, fell from fourth to seventh place.

New entrants reflect recent trends

December 2017 saw several new entrants into the top 10 – each investing in generally different sectors that have seen growing enthusiasm from investor of late. 

With China increasingly back on the radar for investors, Fidelity China Special Situations entered the top 10. Fidelity China Special Situations was a strong performer last year, seeing yearly returns of 42.3 per cent.

There continues to be much excitement about China’s e-commerce and tech giants such as Alibaba, Baidu and Tencent as well as the country’s ongoing economic reform efforts. Despite China no longer achieving 10 per cent growth rates, growth is still strong, expected to be at 6.9 per cent for 2017. James Anderson, co-manager of Scottish Mortgage, recently wrote for Money Observer explaining why he believes ‘China is the future.’ 

In the summer of the 2017, the trust was trading at a discount of 14 per cent. Owing to increased interest from investors, that has now narrowed to 11.5 per cent (as at January 16). 

Another new entrant was Monks IT. The trust holds a broad exposure of equities across the world, with 44.2 per cent in North America, 21.2 per cent in Global Emerging Markets and 17.2 per in Europe and 8.2 per cent in Japan. The popularity of the trust is perhaps reflective of increased optimism for global economic growth, with the world economy finally returning to synchronised growth for the first time since the financial crisis. 

Worldwide Healthcare IT was another new entrant, flying past other funds to reach fourth place. The trust’s new-found popularity may be due to increased optimism for biotech, a sector which constitutes a large of its holdings. Biotech became a hot investment theme in the late 2000s until it saw a correction around 2015. Since then it has started to see increased popularity, partly due to a perception that the Trump White House will take a more relaxed approach to drug pricing. 

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Rank Investment Trust AIC Sector Change since Nov 1 month share price return to 12 Jan 3 -year share price return to 12 Jan
1 Scottish Mortgage Global -- 5.8% 94.4%
2 Woodford Patient Capital UK all companies -- -1.7% -
3 Baillie Gifford Shin
Japanese Smaller Comp +1 5% 189.4%
4 Worldwide Healthcare Biotechnology & Healthcare new entry 2.9% 50.4%
5 Templeton Emerging
EM equities +4 4.4% 48.3%
6 Fidelity China Special
Asia Pacific equities new entry 10% 86.7%
7 Monks IT Global new entry 6% 110%
8 Baillie Gifford Japan Japan equities -1 6.8% 124.6%
9 TR European Growth European smaller comp -2 3.1% 145.4%
10 RIT Capital Partners Flexible Investment new entry 2.1% 50.4%

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