10 most-popular investment trusts – April 2019
One new entrant to the top 10 is now on a whopping 80% premium, but which trust is it?
8th May 2019 11:14
by Tom Bailey from interactive investor
One new entrant to the top 10 is now on a whopping 80% premium, but which trust is it?
The top three most bought funds hardly changed in April, with Scottish Mortgage (LSE:SMT), Smithson Investment Trust (LSE:SSON) and City of London (LSE:CTY) all holding the same spots they did the previous month, according to data from interactive investor, our parent company.
Scottish Mortgage has consistently topped the most-bought trusts list since we started keeping tabs on investor buying behaviour over five years ago. Its three-year return stands around 110%.
Meanwhile, City of London's continued popularity is down to its conservative approach and reputation as a solid provider of income, having increased dividends for 52 consecutive years.
Smithson has proven to be a favourite since its launch last October. Upon launch the trust raised a record £822 million and the trust is proving popular with customers of interactive investor.
Renewables Infrastructure Group (LSE:TRIG) kept its place in the rankings, albeit falling by two places. The trust was added to Money Observer's Rated Fund list for the first time in 2019, replacing Bluefield Solar Income (LSE:BSIF).
Allianz Technology (LSE:ATT) has returned to the top 10 list for the first time in 2019. Managed by veteran tech investor Walter Price, the trust was the third most bought investment trust on the interactive investor platform in the 2018/19 tax year, despite the beating it took when US tech stocks collapsed in the last quarter of 2018.With US tech stocks now once again reaching record highs, the trust has started to post gains strong enough to lure investors back.
Neil Woodford's Woodford Patient Capital Trust (LSE:WPCT) has just about kept its position in the top 10, falling by five positions compared to the month before. The trust has lost investor's 17% over the past three years.
In comparison, over the same time period all but two of the other trusts in the top 10 have posted returns of over 50%, with three trusts doubling investors' money, by returning more than 100%. As the name suggests, investors in the trust will have to be patient.
A new edition to the top 10 was Lindsell Train (LSE:LTI). The trust has provided strong performance of the past few years, with a three-year return of over 180%.
The trust, however, is currently on a premium of almost 80%. That means that shares in the trust are trading at 80% more than the actual underlying holdings of the trust. According to Adrian Lowcock, head of personal investing at Willis Owen, the trust's holding in Lindsell Train Limited, the management company of Lindsell Train's other investment trust (Finsbury Growth & Income (LSE:FGT)) and open-ended funds, which accounts for 45% of the trust assets, is behind the huge premium.
Lowcock says:
"The business is private and will naturally have benefitted from the fact that Lindsell Train's funds have been growing significantly due to strong performance and growing demand."
Similarly, notes Ben Yearsley, director of Shore Financial Planning:
"It is sort of self-fulfilling - if the trust does well, Lindsell Train fund management gets more fees, benefitting the holding in the investment trust."
Investors, however, should be cautious. According to Yearsley:
"If markets fall and the income generated from fees drops for Lindsell Train you will have a falling net asset value and a falling discount - a double whammy."
Likewise, Lowcock argues:
"Premiums can vanish quickly, and it is rarely wise to over pay for something as the price you pay will effect long term performance. In recent years the net asset value has been around a 20%-30% premium."
Nick Train himself has cautioned about the trust's premium. In January 2017, he pointed out that the trust was expensive, and that continued outperformance could not be guaranteed.
| Investment trust | AIC Sector | Rank change from previous month | 1-month return (as at 2 May) | 3-year return |
|---|---|---|---|---|
| Scottish Mortgage | Global | No change | 2.8 | 110.4 |
| Smithson | Global smaller companies | No change | 4.3 | |
| City of London | UK equity income | No change | 2.3 | 26.3 |
| Finsbury Growth & Income | UK equity income | 2 | 6.8 | 59.5 |
| The Renewables Infrastructure Group | Infrastructure | 2 | 5.1 | 45.5 |
| Fidelity China Special Situations | Asia Pacific | -2 | 2.7 | 82.7 |
| Allianz technology | Sector Specialist: Tech Media & Telecomm | New entry | 6.7 | 180.2 |
| Lindsell Train | Global | New entry | 7.8 | 180.9 |
| F&C | Global | 1 | 1.1 | 69.3 |
| Woodford Patient Capital | UK All Companies | -5 | 4 | -17.4 |
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.