The final month of the 2022 saw bargain hunters pounce on under-pressure investment trusts.
Scottish Mortgage and City of London stayed on the monthly most-bought list for the entire year, the only two investment trusts to do so, as investors kept faith in Baillie Gifford’s flagship “growth” trust and continued to pick up income from “dividend hero” City of London.
Scottish Mortgage delivered a 46% total return loss for 2022, while City of London made investors 9%.
New entry RIT Capital Partners, a wealth preservation trust linked to the Rothschild banking dynasty, fell 4.5% in December, taking its loss for 2022 to 21.5%. The trust currently trades at a 13% discount, but it was as low as 20% in December, suggesting interactive investor customers were bargain hunting.
Home Reit replaced NewRiver Reit on the most-bought list in December. Shares in the real estate investment trust, which aims to fund accommodation for homeless people, plummeted in December as law firm Harcus Parker said it was seeking compensation for shareholder losers as the Reit had not followed its original investment theses.
Investors sought to buy the dip as its discount to net asset value fell to 60% and the shares fell about 25% in December.
However, they may have made a mistake. This morning, Home Reit announced that it was suspending trading in its shares as it was unable to publish audited annual results on time. It was required to publish them by 31 December 2022 but failed to do so as it was undergoing “enhanced audit procedures”.
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The other trust falling off the most-bought list was Polar Capital Technology. Tech shares fell in December, with the trust's share price falling 11%.
Completing the rest of the most-bought investment trust list for December were global trusts F&C and Alliance Trust, in fourth and ninth place. Seen as core holdings for many investors since they own a diversified basket of global shares, they had a mixed 2022. While F&C retained shareholder capital and was flat for the year, which was better than the 8% loss for a global tracker fund, Alliance Trust lost investors 6%.
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In 2022, they returned 13.5%, 26%, 7% and –11% respectively. Renewable energy rose as investors looked for domestic power supplies in the wake of Russia’s invasion of Ukraine, mining shares rose along with commodity prices, and Ruffer managed to successfully protect investor’s capital by using hedging to protect against interest rate rises. Vietnamese companies are seen as a beneficiary of supply chains moving out of China.
Top 10 most-popular trusts in December 2022
|Rank||Investment trusts||Change from November||One-year performance to 3 January 2023 (%)||Three-year performance to 3 January 2023 (%)|
|1||Scottish Mortgage||No change||-46||24|
|2||City of London||No change||9||8|
|3||RIT Capital Partners||New entry||-21||8|
|5||Greencoat UK Wind||Down one||13||17|
|6||Home Reit||New entry||-69||n/a|
|7||BlackRock World Mining||Down two||26||120|
|9||Alliance Trust||Down two||-6||19|
|10||VinaCapital Vietnam Opportunities||Down four||-11||49|
Source: interactive investor. Performance figures: FE fundinfo. Note: the top 10 is based on the number of “buys” during the month of December.
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