A UK equity investment trust is a new entry to our top 10, which is based on the number of buys in March.
UK funds ended an eight-month streak of outflows in February, and there are some signs that investor sentiment towards UK-focused investment trusts is also starting to improve.
In March, City of London (LSE:CTY) re-entered our top 10 table of the most-popular trusts among interactive investor customers (based on the number of buys during the month). It exited the list in November. Prior to that, the trust had been a regular member of the top 10, with its income consistency a key attraction. The trust has raised dividends for 54 years in a row, alongside Bankers (LSE:BNKR) and Alliance Trust (LSE:ATST).
The UK market has been hotly tipped to be one of the main beneficiaries of the ‘reflation trade’ (economic growth and inflation accelerating at the same time), which is a market trend that has been playing out over the past couple of months. Cyclical stocks, which the UK market has plenty of, are expected to perform well.
Improved sentiment coincides with tax-year end. Investors have until 11.30pm on 5 April to ‘use or lose’ their £20,000 yearly ISA allowance.
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Polar Capital Technology (LSE:PCT) lost its place in our top 10 following City of London’s re-entry. At the other side of the reflation trade, technology stocks have fallen out of form. As a result, Polar Capital Technology is trading on a wider than usual discount of 8.5%. Over the past 12-month, its average discounts figure is 3.1%.
The rest of the nine members of the top 10 kept their places in March.
Remaining in pole position is Scottish Mortgage (LSE: SMT). The trust has been caught up in the wider sell-off due to its focus on businesses with disruptive technology, but this has not dented its popularity among interactive investor customers. It has also kept its top spot in a month in which it was announced (on 19 March) that James Anderson, joint fund manager of Scottish Mortgage, will step down from the trust on 30 April 2022. Anderson has managed the trust since April 2000.
Four other Baillie Gifford-managed trusts are in the top 10: Edinburgh Worldwide (LSE:EWI) and Baillie Gifford US Growth (LSE:USA) occupy second and third place, while Pacific Horizon (LSE: PHI) is in fifth position. Further down the table in ninth place is Monks (LSE:MNKS). Its lead fund manager, Charles Plowden, who has turned the trust’s performance around since taking the reins in March 2015, is retiring at the end of April. Co-manager Spencer Adair will step up to become the trust’s lead manager when Plowden leaves.
Allianz Technology (LSE:ATT) continues to prove popular, climbing two places to occupy fourth position in March. Fund manager Walter Price cautioned in January, in an interview with interactive investor, that investors should not expect the high returns made in 2020 to be repeated every year.
He said: “A 70% increase (in the trust's share price in 2020) doesn’t happen very often, and I don’t think people should expect that. Over time we shoot for 15% to 20% (over one year), on a sustainable basis, and I think that we’ve been able to achieve that, and I think that’s what we are shooting for in the future.”
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Two China-focused trusts remain in the top 10, but have slipped down the table, particularly Fidelity China Special Situations (LSE: FCSS), which has fallen from third to eighth place.
On a one-year view, shareholders in both trusts will have no complaints. Fidelity China Special Situations is up 100.9% and JP Morgan China Growth & Income (LSE: JCGI) has gained 86.4%.
But over three months both net asset value (NAV) returns and share price performance has notably varied. Fidelity China Special Situations is up 9.8% in share price terms versus a loss of 9.6% for JPMorgan China Growth & Income. The simple answer to China’s outperformance over the past year or so is that it was first-in and first-out of the crisis.
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Finally, in 10th place is BlackRock World Mining (LSE:BRWM). The trust entered our top 10 in December. Over the past year, the price of many commodities has surged, proving to be a tailwind for the trust’s performance, which over this time period is up 124.2%.
Top 10 most-popular investment trusts: March 2021
|Ranking||Trust||Sector||Rank change from February 2021||One-year performance to 1 April 2021 (%)||Three-year performance to 1 April 2021 (%)|
|1||Scottish Mortgage||Global||No change||107.2||161.3|
|2||Edinburgh Worldwide||Global smaller companies||No change||87.4||113|
|3||Baillie Gifford US Growth||North America||Up 4||126.6||197.5|
|4||Allianz Technology||Technology & Media||Up 2||69.8||124|
|5||Pacific Horizon||Asia Pacific ex Japan||Down 1||149.1||112.3|
|6||JPMorgan China Growth & Income||Asia Pacific ex Japan||Down 1||86.4||119|
|7||City of London||UK equity income||New entry||29.6||8.3|
|8||Fidelity China Special Situations||Asia Pacific ex Japan||Down 5||100.9||83.9|
|10||BlackRock World Mining||Commodities & natural resources||Down 1||124.2||83.8|
Source: interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of March 2021.
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