There are two new entries in our top 10 table this month, says Kyle Caldwell, who highlights the key trends.
Investors are continuing to spread risk by preferring global exposure. Among our top 10 most-popular funds for July, with the exception of Fundsmith Equity, investors are favouring index funds for investing in global equities. This is due to the low fees and relative certainty of getting exactly what it says on the tin – broadly the return of the index that’s being mirrored.
The same global trend is evident in four of the top 10 most-bought investment trusts in July: Scottish Mortgage (LSE:SMT), Alliance Trust (LSE:ATST), F&C (LSE:FCIT) and JPMorgan Global Growth & Income (LSE:JGGI).
Scottish Mortgage, which continues its streak as the most-bought investment trust each month since June 2019, has now made a small positive return year-to-date on the back of a 10% rise in its share price over the past month. However, it remains firmly in the red over one and three years, having lost 15.4% and 14.3%.
The trust seeks to find exceptional growth companies and has some exposure to the artificial intelligence (AI) theme, mainly through its holding in NVIDIA (NASDAQ:NVDA). The trust's investment style and 30% allocation to unlisted companies has held back performance over the past couple of years due to the rising interest rate environment.
Also remaining highly popular among investors are multi-manager investment trusts F&C and Alliance Trust. The duo are considered potential one-stop shops for investors due to their diversification and reliable dividends, with both trusts having increased payouts for more than 50 years.
The fourth global trust, JPMorgan Global Growth & Income, is one of two new entries in July. It has appeared in the top 10 a couple of times in 2023, and last featured in May. It adopts a total return approach, aiming to outperform the MSCI All Country World Index over the long term.
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The other new entry, Pershing Square Holdings (LSE:PSH), has not appeared in the top 10 for a couple of years. The trust is managed by star investor Bill Ackman, who looks for high-quality businesses with strong barriers to entry. It is a highly concentrated portfolio and typically holds between eight and 12 stocks.
Ackman also puts hedging strategies in place to reduce risk or take advantage of opportunities. A recent trade that paid off handsomely was putting hedges in place when interest rates were low in the expectation that rates would rise significantly. As we now know, interest rates have risen. Its big discount, currently 33.9%, was highlighted in our latest Bargain Hunter article. In addition, the trust was included in Andrew Pitts' 10 adventurous trust tips.
City of London, which retains second place, is a consistent dividend payer with 56 years of consecutive income increases under its belt. Its consistent process and long-tenured manager Job Curtis, who has been at the helm since 1991, make it compelling for investors seeking a core UK equity income option.
Merchants, unchanged in 10th place, is managed by Simon Gergel and aims to deliver an above-average level of income through investing mainly in higher-yielding large UK companies.
Gergel recently visited our London media studio to record an interview in which he names the income stocks he’s been buying and selling this year. He also made the case for why the UK is a great place to hunt for income shares at the moment.
The other UK trust proving popular is Greencoat UK Wind (LSE:UKW), which is unchanged in third place. Fund manager Stephen Lilley also recently visited our recording studio. In the video interview, Lilley explains why the trust's 10-year track record of growing its dividend in line with RPI inflation each year is sustainable. He also explains why he feels it's unjust that the trust is trading on a rare discount.
Polar Capital Technology Trust returned to the top 10 last month on the back of excitement over AI. Its rival, Allianz Technology Trust (LSE:ATT), also re-entered the top 10 last month, but fell out of the rankings in July. Fund manager Ben Rogoff was another recent interviewee. He discussed how he is aiming to profit from AI advancements, and explained why AI-related shares are unlikely to be in a bubble.
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Occupying ninth place is BlackRock World Mining Trust (LSE:BRWM). Fund manager Evy Hambro explained in a recent On The Money podcast episode why we are a couple of years into a potential new commodities ‘supercycle’, where demand outweighs supply for a sustained period.
The other investment trust exiting the top 10 in July was 3i Group (LSE:III). The private equity trust was a new entry in June, but has not retained a place in the rankings.
Top 10 most-popular investment trusts in July 2023
|Rank||Trust||Change from June||One-year performance to 1 August 2023 (%)||Three-year performance to 1 August 2023 (%)|
|1||Scottish Mortgage||No change||-15.4||-14.3|
|2||City of London||No change||3.5||48.4|
|3||Greencoat UK Wind||No change||-1.5||16.7|
|4||Alliance Trust||Up four||10.8||42.4|
|6||Polar Capital Technology||Down two||7.9||18.7|
|7||JPMorgan Global Growth & Income||New entry||11.5||59.8|
|8||Pershing Square Holdings||New entry||10.4||53.3|
|9||BlackRock World Mining||Down four||12.1||83.3|
Source: interactive investor. Performance figures: FE fundinfo. Note: the top 10 is based on the number of “buys” during the month of July.
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.