Interactive Investor

Top 10 most-popular investment trusts: May 2022

1st June 2022 12:34

Kyle Caldwell from interactive investor

There are two new entries in our top 10 table, with some investors on the lookout for bargains.

While there is plenty of caution in the air, some investors are viewing attack as the best form of defence by attempting to take advantage of stock market volatility.  

This is reflected in the presence of three out-of-form trusts in our top 10 table, which is based on the number of buys during the month of May among customers of interactive investor.

Scottish Mortgage (LSE:SMT), Smithson Investment Trust (LSE:SSON) and Polar Capital Technology (LSE:PCT), have all seen their share prices come under pressure over the past six months, on the back of rising inflation and increases in interest rates. Both have had the effect of devaluing the lofty valuations and lowering the share prices of growth companies, including technology firms. 

While there may be further short-term pain, many investors buying today will be doing so looking at the longer-term picture in the hope that ‘buying low’ today will pay off on a three-to-five-year view.

Scottish Mortgage, which has seen its share price almost halve since its record high last November, is trading on a discount of 5.8%. In an interview with interactive investor’s Funds Fan podcast last month, deputy fund manager Lawrence Burns urged investors to think long term. Burns also explained how Scottish Mortgage has responded to the growth sell-off, and also explained that the valuations for the unlisted companies held are “kept fresh” when there are falls in public equity markets.

In May, the global trust once again retained its title as the most-popular investment trust among interactive investor customers. It has consistently occupied the top spot since June 2019.

Smithson, which exited the top 10 in April, returned in May in seventh place. The trust, managed by Simon Barnard, has seen performance come off the boil this year as investor appetite for growth shares has reduced. Smithson shares are down 32.8% over the past six months. The shares can be picked up on a discount of 9.7%. This is a sizeable discount compared to its historical averages.

The trust applies the investment philosophy of Terry Smith’s Fundsmith Equity fund, but instead focuses on global smaller companies deemed too small for the original Fundsmith.

Barnard, who appeared on interactive investor’s Funds Fan podcast in May, informed listeners that he has deployed all the trust’s cash position in the hope that stock markets have bottomed out and the investment trust will maximise returns when they recover.

Polar Capital Technology (LSE:PCT) is ninth in our top 10. It is managed by Ben Rogoff, who was a recent guest on The Richard Hunter Interview. Over the past six months, its share price has declined by 27.7%. In March, the trust fell out of the rankings, but swiftly returned in April. It is trading on a wider-than-usual discount of 13.4%.  

While it has not yet fallen to a discount, the sky-high premium of Tritax Big Box REIT (LSE:BBOX), a new entry to the top 10 in May, has fallen notably over the past couple of weeks following a dip in its share price. The trust, which specialises in UK logistic assets, has seen its share price negatively impacted by Amazon (NASDAQ:AMZN)’s announcement a month ago that it had overestimated on warehouse space, and is now scaling back.

As a result, the trust’s hefty premium has fallen, which some investors have been taking advantage of. Those attempting to buy at a cheaper price will be doing so in the belief that the warehouse success story of the pandemic will continue. Data from Winterflood, the investment trust analyst, shows that prior to Amazon’s announcement the trust was trading on a premium of 28%. Its premium now stands at 5.7%. Over the past month, its shares are down 9.2%.

The rest of the top 10 constituents are unchanged, but there have been some interesting positional moves. Climbing to second place from seventh is Ruffer Investment Company (LSE:RICA). It is one of three “wealth preservation” trusts in the top 10, alongside Capital Gearing (LSE:CGT) and Personal Assets (LSE:PNL).

Moving up to third position is Greencoat UK Wind (LSE:UKW). The trust, which invests in wind farms in the UK, was in ninth place in April, having entered the top 10 in March. It aims to provide investors with an annual dividend that increases in line with RPI inflation.

Slipping down a few places to occupy fourth and fifth are BlackRock World Mining Trust (LSE:BRWM) and City of London (LSE:CTY).

The trusts that exited the top 10 are Gore Street Energy Storage Fund (LSE:GSF) and Alliance Trust (LSE:ATST).

Top 10 most-popular investment trusts: May 2022 

Rank Trust Sector Rank change from April One-year performance (%) to 1 June 2022 Three-year performance to 1 June 2022 (%)
1 Scottish Mortgage  Global Unchanged -32.9 62.2
2 Ruffer Investment Company Flexible Investment Up five 10.4 57.8
3 Greencoat UK Wind Renewable Energy Infrastructure Up six 19.6 29.6
4 BlackRock World Mining Commodities & Natural Resources Down one 16.7 159.3
5 City of London UK Equity Income Down three 12.4 20.3
6 Capital Gearing Flexible Investment Down two 6.7 25
7 Smithson Global Smaller Companies New entry -23.4 12.5
8 Tritax Big Box REIT Property - UK Logisitics New entry 6 51.7
9 Polar Capital Technology Technology & Media Down one -11.7 51.2
10 Personal Assets Flexible Investment Down four 5.7 24.5

Source: interactive investor. Performance figures: FE fundinfo. Note: the top 10 is based on the number of “buys” during the month of May. 

 

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.

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