There were four new trust entrants in our top 10 league table at the start of 2019.
The start of the year is typically a time investors re-evaluate their portfolios and it appears investors of our parent company interactive investor have been doing just that.
Our top 10 most-bought investment table, which we update each month, barely changes, but in January 2019 there were four new trust entrants.
The high income on offer was no doubt an attraction in the case of Henderson Far East Income, which is yielding 6.3%, and entered our table in sixth place. The trust, managed by Michael Kerley, remains positive on China, which accounts for over a quarter of the portfolio. It persistently trades on a small premium, which is currently 2.3%, according to Winterflood, the broker.
The next new entrant, 3i Infrastructure, in eighth place, has grown in popularity despite displaying a more expensive price tag. It is trading on premium of 23.6%, double its 12-month average premium figure of 10.1%. Infrastructure has high barriers to entry and strong pricing power, qualities that hold up well when global equity markets fall out of form.
Two global trusts are the other new trusts, with Murray International and F&C Investment Trust, occupying ninth and tenth spots. Global trusts and funds have become more popular since the Brexit vote in June 2016, with investors increasingly choosing to reduce ‘home bias’.
But at the top end of our league table investor preferences stayed relatively stable.
Scottish Mortgage kept its top position. After heavy falls in December, the trust was able to provide investors a one-month return of 6.2% in January. With its portfolio fairly weighted to US equities, the trust’s strong January results were part of the S&P 500’s strongest January since 1987. (LINK)
In second place is City of London, a trust run with a very different style. Rather than focus on highflying tech and growth firms, Job Curtis’ trust looks to provide investors with stable income.
Meanwhile, Smithson, launched in October 2018, has continued to be popular with investors. The trust looks to apply the investment style of Smith’s Fundsmith Equity fund to smaller companies, but under the closed-ended structure. The trust provided investors with a 3.8% return in January.
Nick Train’s Finsbury Growth & Income also kept its place in the rankings, occupying fourth place.
The one thing all of the above trusts in the top four have in common is that they all have well-known managers involved in the investment decision making. This suggests investors may be more prepared to stick with big name managers in times of market turbulence.
Meanwhile, Neil Woodford’s Woodford Patient Capital climbed up the rankings by three places. Woodford’s trust has been dogged by poor performance, with the trust losing 5% on a three year timescale. In contrast, the rest of the trusts in the rankings have had above double-digit growth, with the leader, Scottish Mortgage, providing 110%.
However, as Woodford’s continued presence in the most-bought rankings, not all investors have yet lost faith.
Baillie Gifford Shin Nippon slipped in the rankings, to fifth place.
|Investment trust||AIC Sector||Rank change from previous month||1-month return % (as of 4 Feb 2019)||3-year return %|
|Scottish Mortgage||Global||No change||6.2||110.1|
|City of London||UK Equity Income||No change||3.1||22.9|
|Smithson||Global Smaller Companies||No change||3.8|
|Finsbury Growth & Income||UK Equity Income||No change||2.6||47.9|
|Baillie Gifford Shin Nippon||Japanese Smaller Companies||-1||2.7||92.1|
|Woodford Patient Capital||UK All Companies||3||1.4||-5|
|Henderson Far East Income||Asia Pacific - Excluding Japan||New entry||3.9||55.8|
|3i Infrastructure||Sector Specialist: Infrastructure||New entry||2.7||66.5|
|Murray International trust||Global Equity Income||New entry||2.6||73.2|
|F&C Investment trust||Global||New entry||4.5||72.2|