The 10 most-popular investment trusts: July 2022
1st August 2022 12:20
by Sam Benstead from interactive investor
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A rebound for stock markets did not prompt much portfolio reshuffling among interactive investor customers
Investors largely sat on their hands as stock markets rallied strongly in July, with just two new entries in the top 10 most-bought trusts and the top three most-popular trusts unchanged.
Interactive investor customers continued to pile into Scottish Mortgage, the growth trust from Baillie Gifford, as shares returned nearly 20% in July due to a dovish pivot from the US central bank.
Federal Reserve chair Jerome Powell acknowledged slowing economic activity in America, something that will bring down inflation and therefore make rate hikes less likely. He also said that his team would make rate decisions on a month-by-month basis by looking at economic data, rather than setting out decisions in advance.
They also kept investing in City of London, the UK stocks dividend stalwart run by veteran investor Job Curtis.
BlackRock World Mining was the final trust in an unchanged top three, with the economic reopening after the pandemic shutdowns in 2020 fuelling strong returns for natural resource stocks and commodity prices.
The main change in July compared with June was the growing popularity of renewable energy investment trusts. Greencoat UK Wind rose two places to fourth and JLEN Environmental Assets was a new entry in ninth place.
Renewable energy has been a great place to invest in the past year, as power prices (and profits) rise, and green energy takes centre stage as a means of cutting dependence on Russian oil and gas.
These trusts gained popularity at the expense of so-called “capital preservation” trusts Capital Gearing and Ruffer Investment Company, which both fell one place in the rankings to fifth and sixth place respectively. Personal Assets, another defensive trust, rose three places to seventh, however.
The trio are stars of the investment trust universe this year due to their defensive characteristics amid falling stock markets, their fortunes could turn if stock markets continue to rally.
With commodity prices beginning to drop and central banks focusing their attention on lagging economic growth, as well as inflation, interest rates could begin to fall next year.
Lower rates, as forecasted by bond investors, may be good news for stocks, and particularly those riskier firms – which are shunned by capital preservation trusts – that rely on future profits for their valuations.
Nevertheless, investors own such trusts to protect their portfolios when markets turn south – and they have proven excellent at doing so this year.
This means they are likely to remain popular given all the uncertainty today, from high inflation, the US economy in recession, and the war in Ukraine.
Henderson Far East Income was the other new entry in eighth, and European Assets dropped two places to tenth.
| Position | Trust | Change from June | One-year performance to 31 July (%) | Three-year performance to 31 July (%) |
|---|---|---|---|---|
| 1 | Scottish Mortgage | No change | -35.2 | 55.5 |
| 2 | City Of London | No change | 9.8 | 10.9 |
| 3 | Blackrock World Mining | No change | 2.6 | 84 |
| 4 | Greencoat UK Wind | Up two | 20.6 | 29.4 |
| 5 | Capital Gearing | Down one | 4 | 22 |
| 6 | Ruffer | Down one | 5.6 | 37.7 |
| 7 | Personal Assets | Up three | 1.9 | 19.4 |
| 8 | Henderson Far East Income | New entry | 4.4 | -9.6 |
| 9 | JLEN Environmental Assets | New entry | 25.2 | 25.4 |
| 10 | European Assets | Down two | -27 | 6.2 |
Source: Fe FundInfo, 31 July 2022. Note: the top 10 is based on the number of “buys” during the month of July.
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