Top 10 most popular investment trusts: July 2019

Scottish Mortgage has knocked Woodford Patient Capital off the top spot, to reclaim its crown as the most popular investment trust among customers of interactive investor.

The trouble with trying to buy on the cheap is the risk of catching the proverbial falling knife, with Woodford Patient Capital a case in point.

In June, the poor-performing investment trust climbed up to the top of the leaderboard to become the most purchased closed-ended fund among customers of interactive investor, the parent company of Money Observer. It knocked Scottish Mortgage off the top spot, a position that the Baillie Gifford-run trust had occupied every month since May 2015.

Top 10 most popular funds: July 2019

Investors were attempting to ‘buy low’, as in the month of June Woodford Patient Capital saw its share price come under heavy pressure following the suspension of Woodford’s flagship open-ended fund, Woodford Equity Income. It fell 28.6% in June and its discount widened to over 30%, as concerns mounted over the high crossover of holdings between the two portfolios.

Fast-forward one month and the situation now looks even more precarious, after it came to light that Neil Woodford had sold over half his personal stake in Woodford Patient Capital ahead of potentially being axed by the trust’s board. An announcement from the board to shareholders in late July stated that it would “engage with a broader range of third-party managers...which may or may not lead to a change in the company's management arrangements”.

In July, Woodford Patient Capital remained under pressure, with the share price falling 15.5% across the month, from 56.1p to 47.4p. Its discount has widened out further to 41.9%, as at 2 August. In contrast, over the past 12 months the trust has trading on an average discount of 16.6%, according to Winterflood, the broker.

During July, customers of interactive investor were still drawn to the bargain credentials of the wide discount, but interest cooled somewhat and Woodford Patient Capital fell from the top spot to fifth place in the rankings.

Scottish Mortgage regained the top spot, with performance over both short and long time periods continuing to impress. The FTSE 100 listed company, managed by James Anderson and Tom Slater, favours companies that are using technological change to their advantage. 

In second place, climbing up the leaderboard from eighth last time around, is Lindsell Train Investment Trust. On 5 July, the trust’s share price declined by 22%, following Hargreaves Lansdown’s decision to remove two of Lindsell Train’s open-ended funds from its Wealth 50 list of recommendations. As a result, its sky-high premium of over 80% dramatically fell, to 43%.

Over the course of the month, Lindsell Train Investment Trust staged something of a recovery, before the shares headed south once again. For the month of July, the share price fell by 29.6%, from £19.03 to £13.40. Its premium at the end of July stood at just under 60%.

Therefore, its increased popularity over the month of July is a sign that investors were again attempting to take advantage of share price weakness. But in doing so, investors are also choosing to accept the excessive premium that comes attached with the trust. For a detailed explanation on why the premium is so high, click here.

Also climbing up the rankings is Smithson investment trust, which last autumn raised £822.5 million, a record for an investment trust. The trust aims to replicate the investment philosophy of Terry Smith’s Fundsmith, the company under which it was launched, but instead focuses on global smaller companies. Performance has been promising since launch, with Smithson up 19.9%.

Next, in fourth spot, is Finsbury Growth & Income Trust, a regular in the top 10. Around a third of its assets are invested in either out-and-out tech companies such as Sage Group, or companies that are radically improving productivity through technology.

Outside of the top five, there are two new entrants in July: Syncona and Polar Capital Technology, joining Allianz Technology, Monks and City of London investment trust, who all retain their places in the top 10.  

Rank Investment trust AIC sector Rank change from June 1-year return (as at 5 August) 3-year return
1 Scottish Mortgage Global 1 2.80% 89.40%
2 Lindsell Train Investment Trust Global 6 20.50% 91.50%
3 Smithson Global smaller companies 3 N/A N/A
4 Finsbury Growth & Income UK equity income -1 16.70% 54.30%
5 Woodford Patient Capital Growth Capital  -5 -44.20% -49.40%
6 Allianz Technology Technology & Media 2 19.20% 148.20%
7 Syncona Biotechnology & healthcare New entry -1.20% 95.90%
8 Monks Global 2 9.10% 99.30%
9 Polar Capital Technology Technology & Media New entry 13.70% 100.80%
10 City of London UK equity income -6 1.80% 19.40%

 

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Comments

WPCT

I'm dribbling money into WPCT - if only to average down initialpurchases at much higher prices 70 - 95 p

The worst than can happen is that fund gets take over or is liquidated. My estimation is that NAV is over-valued by not as low as current share value around 40p.

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