Top 10 most popular investment trusts - February 2018

Funds and Investment Trusts March 7, 2018 by Tom Bailey

After a falling out of the top 10 table last month, Woodford Patient Capital has regained its place as one of the most popular funds to buy, ranking third according to data for the month of February from our sister website Interactive Investor.

The trust was a regular among the top 10 most-bought choices on Interactive Investor last year. However, in January it slipped out the rankings, amidst continuing negative coverage of Woodford and the various trusts and funds he manages. 

Perhaps most attractive to investors right now is the trust’s deep discount of 13 per cent, compared to its 12-month average discount of 6.2 per cent. The trust claims that many of its investments, focusing on UK biotech and other unlisted technology companies, are set to reach critical milestones this year. A lot of investors buying now are likely hoping that this will lead to the current discount narrowing.

Recently, Woodford sat down with Money Observer, outlining why he believes his critics are wrong as well as why the UK economy is being underestimated right now. 

Scottish Mortgage, predictably, took number one place again. The global equity focused investment trust has been our most-bought trust for almost one full year now. 

Unusually for the solidly performing trust, it is currently on a slight discount of around 1.4 per cent. On average over the past 12 months it has been on a premium of 1.1 per cent – so now is a slightly cheaper time to buy. 

Next, Baillie Gifford Shin Nippon has continued its climb up the rankings to number two, while its sister trust, Baillie Gifford Japan IT has slipped slightly to ninth – although it still remains within the top 10.

Both trusts have seen a surge in popularity owning to growing interest in Japan from retail investors. The country is widely considered to be on the road of beneficial economic and corporate governance reform. 

Even Shin Nippon’s relatively high premium has failed to keep investors away. While the trust’s premium has fallen from its high of 13 per cent, it still trades at 10 per cent above the value of its underlying assets. By contrast, its historical 12-month average is a 6 per cent premium. 

Shin Nippon produced a 53.8 per cent share price return in the calendar year of 2017, while its three-year share price performance is 176.4 per cent. Of course past performance is no guarantee of future returns – although among the top 10 most popular trusts Shin Nippon ranks highest for one-month returns, at 5.8 per cent. 

Other Asian-focused trusts have also stayed in the top 10. Fidelity China Special Situations fell by three places but still remains undeniably popular, coming in at seventh place. Its discount, 11.2 per cent, is not far off its 12-month average. 

Last month’s new entrant, VinaCapital Vietnam, has remained popular – albeit slipping down the ranking four places. Vietnam, a frontier market in the midst of economic reforms, is an increasingly popular place for investors – and VinaCapital is one of the easiest ways for retails investors to gain exposure.

Edinburgh Investment Trust is a new addition to the top 10 this month. Run by Mark Barnett – whom Money Observer recently interviewed – it is now on a 9 per cent discount. This is much wider than its 6.5 per cent average – potentially making it attractive to investors right now.

Its fellow UK equity income stalwart City of London has also shot up the rankings, going from tenth place to fourth. It is currently on a 1.2 per cent premium, just above its 1.1 per cent average. 

Templeton Emerging Markets fell out of the rankings this month. Despite optimism over emerging markets and the trust’s strong performance over recent years, the departure of manager Carlos Hardenberg has likely instilled some reservations among potential {border-collapse:collapse;border-spacing:0;}.tg td{font-family:Arial, sans-serif;font-size:14px;padding:0px 0px;border-style:solid;border-width:1px;overflow:hidden;word-break:normal;}.tg th{font-family:Arial, sans-serif;font-size:14px;font-weight:normal;padding:0px 0px;border-style:solid;border-width:1px;overflow:hidden;word-break:normal;}.tg .tg-677v{font-weight:bold;font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf;vertical-align:top}.tg .tg-26ft{font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;text-align:center;vertical-align:top}.tg .tg-7ujz{font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf;text-align:center}.tg .tg-i61q{font-weight:bold;font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf;text-align:center}.tg .tg-mg5l{font-weight:bold;font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf;text-align:center;vertical-align:top}.tg .tg-lylg{font-weight:bold;font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf}.tg .tg-9wvm{font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;text-align:center}.tg .tg-bhuw{font-size:10px;font-family:Verdana, Geneva, sans-serif !important;;background-color:#f3eddf;text-align:center;vertical-align:top}

Rank Investment Trust AIC Sector Change since Jan 1 month share price return to 6 March 3 -year share price return to 6 March
1 Scottish Mortgage IT Global -- 2.9% 83%
2 Baillie Gifford Shin Nippon Japan Equities +1 5.8% 176.4%
3 Woodford Patient Capital UK All Companies new entry -3.3% -
4 City of London IT UK Equity Income
-1.3% 13.4%
5 Monks IT Global +2 1.3% 91.7%
6 VinaCapital Vietnam Opp Country Specialists Asia Pacific -4 1.7% 119.4%
7 Fidelity China Special Situations Country Specialists Asia Pacific -3 -0.4% 87.3%
8 Edinburgh IT UK Equity Income
new entry
-4.5% 3.6%
9 Baillie Gifford Japan IT Japan Equities -4 -0.4% 84.6%
10 Witan IT Global new entry -0.7% 42.2%

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