Interactive Investor

Top 10 most-popular investment trusts: February 2021

1st March 2021 13:50

Kyle Caldwell from interactive investor

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There’s some eye-catching discounts that may not last for long among our top 10. 

It has been an eventful couple of weeks for Scottish Mortgage (LSE: SMT), which has been caught up in the tech sell-off. Its share price has fallen from 1,415p (on 15 February) to end the month at 1,135p, a 19.8% decline.

Prior to the slump, Scottish Mortgage was up 15.7% since the start of 2020, but is now in negative territory, down 5.3% (as at the end of February). As a result, its longstanding premium has vanished, with the trust trading on a discount of 6% (ahead of today’s market open), according to Winterflood.

Triggering the tech sell-off, which has negatively impacted other growth stocks, were concerns over inflation rearing its ugly head. If this scenario plays out, in theory growth stocks will become less appealing owing to their premium valuations versus cyclical companies (businesses that are more economically sensitive).

Some investors will view the tech sell-off as long overdue, owing to the expensive price tags in the sector, particularly the FAANGs.

Others, however, will view Scottish Mortgage’s impressive long-term performance and its current discount as an opportunity to take advantage of a dip that may not continue. In today’s trading session (as at 1pm), Scottish Mortgage’s share price had risen by 4.5% to 1,186p, which in turn resulted in its discount decreasing.

In February, the sell-off did not dissuade customers of interactive investor as Scottish Mortgage retained its position as the most-popular investment trust.

The trust has been taking profits in Tesla (NASDAQ:TSLA) over the past couple of months, due to its strong run of performance over the past year, up over 800% since the start of 2020. If Scottish Mortgage’s position in Elon Musk’s firm was left untouched, it would have equated to a third of the portfolio, according to analysis by Numis.

Tesla accounted for 5.1% of Scottish Mortgage at the end of January, the fourth-biggest position. Its three biggest weightings are to Tencent (SEHK:700), Illumina (NASDAQ:ILMN) and Amazon (NASDAQ:AMZN), at 6.5%, 6.1% and 5.9% respectively. Among the attributes its fund manager James Anderson looks for in businesses are evidence of a genuine competitive advantage and ambitious founders.

There are signs elsewhere in our top 10 that investors view the tech sell-off as an opportunity to ‘buy the dip’. Polar Capital Technology (LSE: PCT), managed by Ben Rogoff, is a new entry in 10th place. In early February, our Bargain Hunter column pointed out that its discount (at the time trading at 6.5%), was notably wider than usual. Prior to today’s market open investors could have bought at an even cheaper price, as the discount stood at 9.5%.

Allianz Technology (LSE: ATT) could also have been snapped up on a rare discount. Ahead of the market open the trust was trading on a discount of 6%.

But the discounts will have narrowed from these levels. As at 1pm, Allianz Technology’s share price was up 5.5%, while Polar Capital Technology’s share price had risen by 2.4%.

Another trend continuing to play out in our top 10 is investors looking East for the potentially higher returns that are on offer. Fidelity China Special Situations (LSE: FCSS) , Pacific Horizon (LSE: PHI) and JP Morgan China Growth & Income (LSE: JCGI) are all in the top five. Also in the top five, in an unchanged second position, is  Edinburgh Worldwide (LSE:EWI). Its fund manager Douglas Brodie focuses on identifying early stage companies that are offering solutions that haven’t yet been addressed by larger companies.

Of the remaining three trusts in our top 10, Monks (LSE:MNKS) slipped three places to eighth place, while Baillie Gifford US Growth (LSE:USA) and BlackRock World Mining (LSE:BRWM) moved up one place, to seventh and ninth position, respectively.

Finally, Smithson (LSE:SSON) slipped out of the top 10 in February. It applies the Fundsmith investment philosophy to global smaller companies.

Top 10 most-popular trusts: February 2021 

  Trust Sector Rank change from January 2021 One-year performance to 1 March 2021 (%) Three-year performance to 1 March 2021 (%)
1 Scottish Mortgage Global No change 103.1 156.1
2 Edinburgh Worldwide Global smaller companies No change 89.9 126.4
3 Fidelity China Special Situations Asia Pacific ex Japan Up 1 97.2 86.8
4 Pacific Horizon Asia Pacific ex Japan Up 2 151.9 137.2
5 JP Morgan China Growth & Income Asia Pacific ex Japan Down 2 118.4 126.2
6 Allianz Technology Technology & Media Up 1 71.6 117.9
7 Baillie Gifford US Growth North America Up 1 131.4 *N/A
8 Monks Global Down 3 52.8 73
9 BlackRock World Mining Commodities & natural resources Up 1 97.7 79.3
10 Polar Capital Technology Trust Technology & Media New entry 47.2 87.2

Source: interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of February 2021. * Insufficient track record.  

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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