Top 10 most popular investment trusts - March 2020

Investors stuck with global and tech trusts, which have been able to hold up in the sell-off.

The month of March in 2020 will probably go down in history. With the world waking up to the potential risk posed by coronavirus, countries across the world entered into lockdown in a bid to stop the virus, which in turn is severely curtailing economic activity.

In response, markets around the world saw some of their worst days either ever or since previous historic crises, such as the Great Depression. The bull market that started after the 2008 crisis now looks well and truly over, with most major indices now way over 20% down.

Meanwhile, to deal with the crisis, central banks engaged in unprecedented measures, such as the US Federal Reserve’s commitment to unlimited quantitative easing.

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Yet these momentous events appear to have had little effect on the buying choices of investment trust investors, according to the latest data from interactive investor (Money Observer’s parent company). The latest data for March shows the choice of investment trusts barely changed from previous months. As the table below shows, there was only three new entries for March, each of which have regularly held positions on the list in previous months.

Once again topping the list was Scottish Mortgage. The global, technology-heavy portfolio, has long proved a favourite. While the trust has seen some losses since the start of the sell-off, its longer-term performance still looks relatively good. On a one-year basis the trust has returned 9.6%, while over three years it has returned 52.6%.

Generally, technology-focused trusts managed to hold on to some of their performance in the sell-off. Also, in the rankings was Polar Capital Technology trust, which still has a one-year return of 17.9%. Allianz Technology trust, run by veteran tech investor Walter Price, also had a positive one-year return, at 4.7%.

These trusts, and Scottish Mortgage, have been able to hold on to a positive one-year performance for two key reasons. First, technology stocks have broadly seen less decline than other stocks in the recent market sell-off. Added to that, technology stocks saw some of the strongest performance in 2019, meaning despite the declines the trusts in question have managed to hold on to positive one-year gains.

In contrast, all the other most-bought trusts now have a negative one-year performance.

The worst performing has been Merchants Trust, with a one-year return of -21.7%. The trust has a large holding in Royal Dutch Shell, one of the worst hit companies in the FTSE 100 due to collapse in the price of oil. Despite its performance suffering, the trust was a new entry for March.

The second worst performing trust in the rankings is City of London, another UK equity income trust. Like Merchants Trust, it has a large holding in Royal Dutch Shell. However, it has also been hurt by large holdings in several UK banks. Banks have been one of the worst performing stocks in the UK in March. This has recently been compounded by the announcement yesterday that UK banks would suspend their dividend payments due to the crisis. Despite these troubles the trust has kept its place as the second most bought trust.

Elsewhere, Finsbury Growth & Income, returned to the top 10. This may have driven by the fact its usual small premium has turned into a discount during the sell-off and at one point widened to a discount of over 10%. However, the trust has often featured on the most-bought list, even when it has had a premium. It is now back trading on a small premium of 1.8%.