Investors cast their nets wider in August, with four new entries in our top 10 investment trust table.
For the second successive month, there was plenty of change among our top 10 table of most-popular investment trusts – with four new entries.
Henderson Far East Income entered in sixth place. A key attraction is its bumper dividend yield of 7.8%. Given that both its share price and net asset value (NAV) performance has disappointed of late, investors are buying in the hope of a turnaround in fortunes. Over one and three years it has lagged the Association of Investment Companies (AIC) Asia Pacific Equity Income sector. Over those time periods, Henderson Far East Income is up 7.1% and 3.5% versus 16.7% and 29% for the sector average. The trust typically trades on a small premium, which is currently 2.4%.
BlackRock Throgmorton, which entered in third position, is also trading on a small premium of 2.4%. The trust’s share price total returns and NAV returns over three and five years significantly outpace the AIC UK Smaller Companies sector. Over one year, it is also ahead of the sector average, with a share price total return over the period of 70.3% against 65.8% for the sector. Manager Dan Whitestone can invest up to 30% of the trust’s assets in both short and long contracts for difference (CFDs), which theoretically enables him to make the most of rising and falling markets.
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BlackRock World Mining re-entered the top 10 having lost its place in July. The trust, which has of late been benefiting from the strength of commodity prices, is managed by experienced investor Evy Hambro.
Just about making the cut in 10th place was RIT Capital Partners. The capital preservation-focused trust invests in a variety of assets, including shares, private investments and hedge funds.
In July, there were also three new entries, although only Fidelity China Special Situations (LSE:FCSS) retained its place in August. Vietnam Enterprise (LSE:VEIL) and JP Morgan China Growth & Income (LSE:JCGI) both exited in August after a brief stay in the top 10.
A regular member of the top 10 that lost its place in August was Edinburgh Worldwide (LSE:EWI). The trust has significantly outpaced rivals over three, five and 10 years. But over the past year its performance has come off the boil. Its share price is up 19.9% and NAV return stands at 22.2% versus 35.6% and 35.3% for the AIC’s Global Smaller Companies sector.
The other trust that lost its place in the top 10 was Polar Capital Technology (LSE:PCT). Of late the trust has benefited from investors turning their attention once again to technology shares at the expense of value shares. Despite strong performance over short and long-term time horizons, the trust remains on a wider-than-usual discount of 7.3%. Over the past year, the trust has typically traded on a discount of 6.6%.
As ever, at the top of the table sits Scottish Mortgage (LSE:SMT). The trust, which focuses on disruptive businesses that have a technological edge over competitors, has been in the top spot for more than two years, since June 2019. Its share price was last week given a boost by China’s best-known technology shares staging a comeback following their recent sell-off on the back of a regulatory crackdown. Scottish Mortgage’s share price is back in sight of the record high of 1,418p seen in mid-February, prior to an outbreak of tech sector jitters later that month.
Rising up the table to take second place in August was Smithson Investment Trust (LSE:SSON). The trust, which applies the investment philosophy of Terry Smith’s Fundsmith Equity fund, but instead focuses on global smaller companies deemed too small for the original Fundsmith, recently announced that it had underperformed its benchmark for the first time since launch in the first half of this year.
The trust, managed by Simon Barnard, returned 4.1% in share price terms, while its NAV return stood at 5.9%. The MSCI World Small and Mid Cap Index, its benchmark, was up 12.4%. Barnard gave a couple of reasons why the companies that Smithson owns did not keep pace with the benchmark; higher inflation and the outperformance of value shares. Given the trust has risen up the top 10, investors have clearly not been put off, and some have seen that six-month period of underperformance as a buying opportunity.
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City of London (LSE:CTY) remains in fourth place. The trust, managed by veteran investor Job Curtis, has a formidable reputation as an income-producing investment trust. Last July marked its 54th consecutive year of rising dividends.
Advancing from 10th to fifth, was Capital Gearing (LSE:CGT). The portfolio invests in a mixture of assets: shares, inflation-linked bonds and property, with small holdings in infrastructure, gold and cash. Investment in equities is normally through investment trusts and other collective investment vehicles.
The final member of the top 10 is Monks (LSE:MNKS). The global trust, regarded as a less aggressive version of Scottish Mortgage, fell by four places in the rankings to ninth position.
Most-popular investment trusts in August
|Trust||Sector||Rank change from July 2021||One-year performance to 1 September 2021 (%)||Three-year performance to 1 September 2021 (%)|
|Scottish Mortgage||Global||No change||42||148.3|
|Smithson Investment Trust||Global Smaller Companies||Up 4||29.4||*|
|BlackRock Throgmorton||UK Smaller Companies||New entry||70.3||97.6|
|City of London||UK Equity Income||No change||30.6||9.5|
|Capital Gearing||Flexible Investment||Up five||15||25.5|
|Henderson Far East Income||Asia Pacific Income||New entry||7.1||3.5|
|Fidelity China Special Situations||China/Greater China||No change||9.2||62.9|
|BlackRock World Mining||Commodities and Natural Resources||New entry||44||88|
|RIT Capital Partners||Flexible Investment||New entry||49.6||35.4|
Source: Interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of August 2021. * Insufficient track record.
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