Interactive Investor

Top 10 most-popular investment trusts: February 2024

Investors have been on the lookout for investment trust bargains with just over a month to go until tax year end.

1st March 2024 09:45

by Kyle Caldwell from interactive investor

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Winners and losers investment trusts 2021 600

With less than a month to go before tax year end, investment trust fans can take advantage of the structure to potentially pick up bargains.

Among our most-bought investment trusts in February 2024, most trade on a discount. This means the share price of the trust is trading below the value of the underlying investments in its portfolio, called the net asset value (NAV).

Three of the trusts in the top 10 offer investors the chance to gain exposure to technology businesses and, by extension, the artificial intelligence (AI) theme at a cheaper price.

Retaining the top spot as the most-popular trust is Scottish Mortgage (LSE:SMT). The FTSE 100-listed company invests in businesses capitalising on technological advancements. It recently repurchased shares in Meta Platforms (NASDAQ:META) (formerly known as Facebook), and also owns Nvidia (NASDAQ:NVDA). Its three-year return shows a loss of 28.6%, but the one-year figure is more favourable, up 12.8%. Over five years, it has outperformed the average global trust, returning 65.8% versus 57.0%. It holds around 30% in unlisted companies, the valuations of which continue to unsettle some investors. For those buying today, Scottish Mortgage’s discount stands at -13.5%.

More direct tech exposure is on offer through Polar Capital Technology (LSE:PCT) and Allianz Technology Trust (LSE:ATT), in fourth and seventh place respectively.

Both Allianz Technology and Polar Capital Technology own six of the seven US tech giants in their top 10 holdings, excluding Tesla (NASDAQ:TSLA). As well as AI, another key sector for the duo is cybersecurity. Over the past year, Allianz Technology is up 52.8%, while Polar Capital Technology has gained 48.8%. Over five years, the returns are 139.0% and 136.9%. Interestingly, over three years Polar Capital Technology has the edge, up 32.9% compared to 25% for Allianz Technology. As well as there being little to separate them in performance terms, the same is true for their discounts, which have been very similar of late. At present, both are trading on a discount of -10.5%.

Retaining second place in the rankings is JPMorgan Global Growth & Income (LSE:JGGI). The trust adopts a total return approach in aiming to outperform the MSCI All Country World Index over the long term. It has been an outstanding performer across one, three and five years. For the latter period, it is up 113.2% versus 47.7% for the global equity income sector average. Those eye-catching returns are attracting a lot of demand, which has led the trust to trade on a small premium of 1.6%. Its yield is 3.4%.

In third place is Greencoat UK Wind (LSE:UKW). It has a stellar dividend track record, having grown its dividend ahead of RPI inflation each year over the past decade. It offers a dividend yield of 7.4% and recently increased its target dividend for 2024 to 10 pence per share, above the Retail Prices Index for December 2023. It is trading on a discount of -17.2%. The discount reflects the feeling among some investors that they are not prepared to take on the extra level of risk to achieve a higher yield when low-risk bonds are yielding around 5%.

Fifth in our table is Alliance Trust (LSE:ATST). It invests globally and adopts a multi-manager approach. Performance has been solid under the management of Willis Towers Watson since March 2017, with its five-year return at 78.4% compared to 57.0% for the global sector average. Its discount is -5.3%.

Next is Pershing Square Holdings (LSE:PSH), managed by star investor Bill Ackman, who oversees a concentrated portfolio of US-listed stocks. Despite Ackman's strong track record, with the trust up 217% over the past five years against 158.4% for North America sector, Pershing Square consistently trades on a big discount, which is -25.5% at present. In an attempt to reduce the discount, the board has been one of the most active in buying back its own shares.

In eighth place is BlackRock World Mining Trust (LSE:BRWM), which has the worst one-year performance figure in the top 10, down -24.5%. It has suffered following interest rate rises, and because China’s economy failed to rebound after the reversal of Covid-19 restrictions. Both have been headwinds for commodity demand. Over five years, it has been a strong performer, up 77.0%. Its discount is -5.3%.

City of London (LSE:CTY) has slipped from third place to ninth. Managed by Job Curtis since 1991, this trust predominately invests in dividend-paying FTSE 100 firms. Curtis adopts a conservative approach by focusing on companies with good cash generation. City has raised its dividend for 57 years in a row. The trust is consistently popular among investors, leading to a small discount of -1.8%.

In 10th place is India Capital Growth (LSE:IGC). It has the best performance over one and three years among the top 10, up 55.5% and 105.7%. Over five years, it is up 127.1%. Its strong performance has led to increased demand, putting it on a small premium of 0.4%. 

There are a couple of big trends at play that have been tailwinds for India Capital Growth. One is that India’s stock market is enjoying a purple patch, another is that investors are showing a tendency to prefer India over China as an investment destination. In part, this is due to the latter’s underwhelming stock market performance over the past couple of years. There are also concerns about political risk in China, with government interventions in certain sectors a couple of years ago still fresh in investors’ minds.

Top 10 most-popular investment trusts in February 2024 

Ranking Investment trust Change from January One-year return to 29 Feb 2024 (%)Three-year return to 29 Feb 2024 (%) 
1Scottish Mortgage No change 12.8-28.6
2JPMorgan Global Growth & Income No change 22.454
3Greencoat UK Wind Up three -7.225.5
4Polar Capital Technology Up three48.832.9
5Alliance Trust Down one 21.444.4
6Pershing Square Holdings Down one 34.464.8
7Allianz Technology Up one 52.825
8BlackRock World Mining Up one -24.5-0.4
9City of London Down six -5.125.6
10India Capital Growth No change 55.5105.7

Performance data sourced from FE Fundinfo. Performance data to 29 February 2024. Rankings are based on the number of buys during February 2024.

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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