Interactive Investor

Top 10 most-popular investment trusts: December 2023

Three new entrants to our top 10 most-bought investment trust table, as investors take stock of 2023 and assess prospects for the year ahead.

2nd January 2024 12:42

by Kyle Caldwell from interactive investor

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The end of a year is a good time for investors to take stock and review how investments have performed over both the short and long term.

As part of the review, it’s worth looking at the best and worst funds, investment trusts and exchange-traded funds (ETFs) of 2023, and considering whether the winners will maintain their form in 2024 and whether the laggards can stage a recovery.

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The big investment theme of 2023 was technology shares returning to form, particularly the US giants, including Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corp (NASDAQ:MSFT). Share prices were boosted by excitement around the potential for artificial intelligence (AI) to disrupt various industries.

Time will tell whether this theme has staying power in 2024 and beyond, but many investors are hoping that will be the case, with Polar Capital Technology (LSE:PCT) returning to the top 10 most-bought investment trust table in December in eighth place. The trust, managed by the experienced Ben Rogoff, last appeared in the top 10 in July.

There were two other new entries in December, with both trusts having made brief appearances in the top 10 in 2023.

Back in sixth place is 3i Group Ord (LSE:III). The private equity trust was last in the top 10 in September and, prior to that, May. It has been delivering stellar returns in the rising interest rate environment, which has negatively impacted investor sentiment towards the sector. Its one-year return of 85.5% is vastly ahead of all other private equity trusts.

A key driver of 3i’s performance has been a notable valuation uplift for its biggest private equity holding, Action, the Dutch non-food discount retailer. New investors, however, are paying a big premium for its shares, currently 29.3%.  

Returning in seventh place is Pershing Square Holdings (LSE:PSH), which is a concentrated portfolio of US-listed stocks, managed by star investor Bill Ackman. It last appeared in the top 10 in July. Despite Ackman's strong track record, Pershing Square consistently trades on a big discount, -28.8% at present. The discount has remained stubborn over the past year, although the board has been one of the most active in buying back its own shares.

Making way for the three new entrants were Gore Street Energy Storage Fund (LSE:GSF), Henderson Far East Income (LSE:HFEL) and Merchants Trust (LSE:MRCH), which were in the bottom three places in November's top 10.

Unchanged in pole position is Scottish Mortgage (LSE:SMT). It was briefly knocked off the top spot in October (having been the most-bought trust each month since June 2019), but in November it returned to the summit.

Scottish Mortgage owns growth companies (with around 30% in private firms), whose profits are generally going to come a long way in the future. In industry-speak, these assets are long duration, and when interest rates rise the valuations of such investments fall due to the availability of better returns on lower-risk investments. As a result, Scottish Mortgage has seen its share price returns slump over the past three years, down -32.6%.

However, performance has been improving over the past few months, with its one-year performance figure now positive, up 12.5%. Thomas McMahon, investment trust research manager at Kepler Trust Intelligence, said in a video interview with interactive investor that one thing holding back Scottish Mortgage’s share price is “wariness about valuations” of the private companies. He thinks an IPO for one of the private firms “could change sentiment”.

McMahon said: “Probably what the portfolio really needs is some good news and some good results for certain specific companies. I think that's going to be more meaningful than a growth versus value-type rally, which I don't think is going to quite hit the spot anymore.”

Moving to second place, from fourth, is JPMorgan Global Growth & Income (LSE:JGGI). This trust adopts a total return approach in aiming to outperform the MSCI All Country World Index over the long term. Its dividend yield is 3.7%.

Slipping one place to third is Greencoat UK Wind (LSE:UKW), a renewable infrastructure investment trust managed by Stephen Lilley. It aims to provide investors with a yearly dividend that increases in line with RPI inflation. This has been successfully achieved each year since the trust launched in 2013.

Moving down one place to fourth is City of London (LSE:CTY). Managed by Job Curtis since 1991, this trust predominately invests in dividend-paying FTSE 100 firms. Curtis adopts a conservative approach in focusing on companies with good cash generation. City has raised its dividends for 57 years in a row.

Unchanged in fifth place is BlackRock World Mining Trust (LSE:BRWM). Natural resources stocks are beneficiaries of inflation. This is because as commodity prices rise, mining and oil stocks make more money. These higher profits are returned to investors through share buybacks and higher dividend payments. This has resulted in BlackRock World Mining offering a high dividend yield of 6.8%.

However, bear in mind that the dividend yield for BlackRock World Mining is not guaranteed. In the event of mining companies becoming less generous with their payouts, the dividend will be vulnerable.

Lower down in the table, in ninth place, is India Capital Growth (LSE:IGC). India’s stock market has been in a rich vein of form since Covid. As a result, investors favoured India in 2023 at the expense of China. For more on India, including whether its valuations have become too pricey, check out our long-read feature.

And finally, in 10th place, is Alliance Trust (LSE:ATST), which adopts a multi-manager approach. Willis Towers Watson selects managers with a balance of investment styles, which means Alliance Trust effectively takes style risk off the table. It aims to deliver both growth and income, with a yield of 2.3%.

Top 10 most-popular investment trusts in December 2023

Ranking Investment trust Change from November One-year return to 1 Jan 2024 (%)Three-year return to 1 Jan 2024 (%) 
1Scottish Mortgage No change 12.5-32.6
2JPMorgan Global Growth & Income Up two22.645.5
3Greencoat UK Wind Down one 5.432.5
4City of London Down one 3.426.4
5BlackRock World Mining No change -10.432.7
63i Group New entry 85.5131.3
7Pershing Square Holdings New entry 24.745.3
8Polar Capital Technology New entry 50.512.6
9India Capital Growth Down three 34.1106.2
10Alliance Trust Down three 20.231.9

Performance data sourced from FE Fundinfo. Performance data to 1 January 2024. Rankings are based on the number of "buys" during December 2023.

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.

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