Interactive Investor

Top 10 most-popular investment trusts: December 2020

4th January 2021 15:40

Kyle Caldwell from interactive investor

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Eight of the top 10 were among the 10 best-performing trusts in 2020. 

Many experts have tipped UK funds to bounce back in 2021 following the post-Brexit trade deal and roll-out of Covid-19 vaccines, but investors are continuing to steer clear of their home market.

In fact, in the month of December, the sole UK trust that has been ever-present in the top 10 lost its place. City of London (LSE:CTY), a favoured holding among income investors due to its remarkable consistency in growing dividends (in July 2020 it raised its dividend for the 54th consecutive year), fell from ninth to 11th place in terms of the number of buys during the month by interactive investor customers.

Investors in December focused their sights on some of the best-performing investment trusts of 2020 in the hope their rich veins of form continue in the months ahead.

In total, eight of the top 10 most-popular trusts in December were among the top 10 best-performing trusts of 2020. Two were new entrants to the top 10 in December: Pershing Square Holdings (LSE: PSH) and Baillie Gifford US Growth Trust (LSE: USA)

Pershing Square Holdings, which in December entered the FTSE 100 index, is a UK-listed hedge fund that owns 10 US companies. Bill Ackman, one of the worlds best-known investors, is the man behind the fund.

Baillie Gifford US Growth Trust, which more than doubled investors’ money in 2020, driven by its bias towards technology companies, entered the top 10 in ninth position. Its most favoured holdings include Tesla (NASDAQ:TSLA), Shopify (NYSE:SHOP)Amazon (NASDAQ:AMZN), Zoom Video Communications (NASDAQ:ZM) and Netflix (NASDAQ:NFLX). However, investors need to bear in mind that its premium is notably higher than its 12-month average. According to investment trust analyst Winterflood, the trust is trading on a premium of 11% versus an average premium of 3.7% over the past year.  

Elsewhere,  BlackRock World Mining (LSE:BRWM) was a third new entry in December. It was outside the top 10 best performers, but nonetheless had a strong 2020 in delivering a share price total return of 47%. Investing in mining shares is not for the faint-hearted, as the performance of BlackRock World Mining shows. On a 10-year view, the trust is up just 6%, but over five years it has gained 290%. Several factors add to its risk profile, ranging from investing in less developed markets – which also brings currency risk – to being heavily driven by sentiment and macroeconomic events.

Of the remaining seven trusts, the six that were among the top 10 best-performing trusts of 2020 were: Scottish Mortgage (LSE: SMT), Edinburgh Worldwide (LSE:EWI), Pacific Horizon (LSE: PHI), Fidelity China Special Situations (LSE: FCSS), Allianz Technology (LSE: ATT) and JP Morgan China Growth & Income (LSE: JCGI).

The outlier is Monks (LSE: MNKS). The global trust is regarded as a less aggressive version of Scottish Mortgage. Fund manager Charles Plowden, who is to retire at the end of April 2021, is a growth investor, focusing on the ‘best of the best’. Plowden says he aims to “seek out that rare subset of companies with the potential to grow to multiples of their current size”. Co-manager Spencer Adair will step up to become the trust’s lead manager when Plowden retires.

In terms of positional changes, Monks and Edinburgh Worldwide climbed eight and six places respectively to share joint second place. Both fell short, though, of dislodging Scottish Mortgage from pole position.

Two China-focused trusts slipped a couple of places in the rankings. This perhaps reflects that some ‘rebalancing’ has taken place following their strong share price showings in 2020. China was first-in, first-out of the Covid-19 pandemic, with the country largely keeping new cases under control. As a result, China’s economy recovered much quicker, which meant a buoyant stock market from the end of March.

Baillie Gifford China Growth (LSE:BGCG) slipped out of the top 10 entirely. In November, it was the second most-popular trust, so its exit is noteworthy but is most likely down to the fact that it continues to command a very high premium, currently 18%.

The other trust that exited the top 10, along with Baillie Gifford China Growth and City of London, was Ballie Gifford Shin Nippon (LSE: BGS).

Despite two of its trusts exiting the top 10, Baillie Gifford continues to dominate. The Scottish asset manager has five of its trusts in the top 10.

Top 10 most-popular trusts: December 2020 

  Trust Sector Rank change from November One-year performance to 1 Jan 2021 (%) Three-year performance to 1 Jan 2021 (%)
1 Scottish Mortgage Global No change 110.5 174.8
2= Edinburgh Worldwide Global smaller companies Up 6 87.7 142.2
2= Monks Global Up 8 42.1 79.2
4 Pacific Horizon Asia Pacific ex Japan Up 1 128.6 139.1
5 Pershing Square Holdings Hedge funds New entry 87.2 168.3
6 Fidelity China Special Situations Asia Pacific ex Japan Down 3 68.6 69.9
7 Allianz Technology Technology & Media No change 80.3 154.1
8 BlackRock World Mining Commodities & natural resources New entry 46.7 56.3
9 Baillie Gifford US Growth North America New entry 133.5 N/A*
10 JP Morgan China Growth & Income Asia Pacific ex Japan Down 6 97.5 136.6

Source: Interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of December 2020. *Insufficient track record. 

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 data 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.

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