Woodford’s woes presented a buying opportunity for some investors, sending Woodford Patient Capital to the top of the list.
June was not a good month for fund manager Neil Woodford. At the start of the month, the decision was taken to suspend trading for his flagship open-ended fund, Woodford Equity Income, which was unable to cover its redemptions due to a large number of illiquid holdings.
This spilled over to his investment trust, Woodford Patient Capital, which saw its share price come under pressure.
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One of the main concerns that caused the share price to fall heavily in the month of June, giving up 28.6%, is the large crossover of holdings between the suspended fund and the trust. Winterflood, the broker, estimates that at the end of April companies representing 74% of WPCT’s portfolio value were also held in Woodford Equity Income.
For some investors, however, that presented a buying opportunity, with Woodford’s trust shooting to the top of the most bought list of our league table, which uses customer data from our parent company interactive investor.
The trust’s discount, as of close of trading yesterday (3 July), stood at 33.2%, far wider than its 12-month average discount figure of 14.6%.
This is not the first time that Woodford’s trust has seen contrarian investors attempt to ‘buy low’. In mid-May, just before the open-end fund’s suspension, a number of professional investors were bullish on the long-term prospects for the trust.
The surge in buying Woodford Patient Capital has seen Scottish Mortgage finally dislodged from its place as the most bought trust.
Scottish Mortgage has been the most-bought trust on interactive investor every month since February 2014. Only once, in April 2015, it was briefly toppled by Woodford Patient Capital during its (at the time) record-breaking £800 million launch.
The global equity trust has delivered a three-year return of 101% and 7.4% in June alone.
Global equity trusts in general did well in June, with new entrant Monks posting a one-month return of 7.62%, while Allianz Technology was up 5.2%.
These trusts all have a large weighting to tech shares, giving them heavy exposure to US markets. June saw markets in the US rally following strong dovish signals from the Federal Reserve, with the S&P 500 reaching new highs.
Smithson, a global smaller companies trust with over 50% exposure to the US, also delivered strong monthly returns of over 7%. The trust, the creation of Terry Smith, has been a favourite among fund buyers since its launch in October, consistently sitting among the top three most-bought trusts. June marks the first time the trust has not been towards the top of the rankings, slipping to sixth place.
UK equity income trusts also performed well in June, with Finsbury Growth & Income providing the highest monthly performance of the top 10 names, returning 9.6%.
City of London, more defensively positioned compared to others in the top 10, provided one of its best monthly returns in a while, up 4.13%.
|Rank||Investment trust||AIC Sector||Rank change from previous month||1-month return (as at 3 July)||3-year return|
|1||Woodford Patient Capital||Growth Capital||6||-29.31||-34.6|
|3||Finsbury Growth & Income||UK equity income||1||9.56||52.45|
|4||City of London investment trust||UK equity income||-1||4.13||13.33|
|5||The Renewables Infrastructure Group||Infrastructure||2.05||33.06|
|6||Smithson||Global smaller companies||-4||7.01|
|7||Lindsell Train investment trust||Global||New entry||-0.79||196.06|
|8||Allianz Technology||Technology & Media||1||5.22||166.45|
|9||F&C investment trust||Global||No change||3.2||55.82|
|10||Monks investment trust||Global||New entry||7.62||115.74|