Top 10 most-popular investment trusts: October 2020

by Kyle Caldwell from interactive investor |

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Three new entries to the top 10 as investors focus on one of 2020’s stock-market winners.

The US election is dominating the headlines, but investors’ eyes in recent weeks have been drawn more to the world’s second-largest economy.

China was first-in, first-out of the Covid-19 pandemic, with the country largely keeping new cases under in control. By most counts, China has experienced somewhere close to 5,000 deaths from the virus.

As a result, China’s economy has been able to open up and recover much quicker. Most economic indicators for China look positive again, with the country likely to be the only major economy to expand in 2020.  

The result of this has been a buoyant stock market since the end of March. Data from FE Analytics shows the MSCI China index has provided a total return of 25.6% year to date (in sterling terms). In contrast, America’s S&P 500 index is up 4.8%, while the FTSE All-Share is down 23%.

Investors appear to have been taking note of China as one of the big stock-market winners of 2020. Two new China-focused trusts entered the list of the top 10 most-bought trusts among interactive investor customers in October, with Fidelity China Special Situations (LSE: FCSS) rising from ninth place in September to second place last month.  

JPMorgan Chinese Growth & Income Trust (LSE: JCGI) and Baillie Gifford China Growth (LSE: BGCG) were the two new China entrants, taking fourth and fifth positions in the table.

Rebecca Jiang, co-manager of the JPMorgan Chinese Growth & Income Trust, notes China’s response to Covid-19 has been a key driver behind the market’s recent strong performance.

She says: “While Covid-19 caused a short-term shock to the Chinese economy, the government’s quick and comprehensive mobilisation at the start of the pandemic meant that the impact to consumption and business confidence has been largely cyclical and not structural.

“While some industries are still seeing some short-term pain as a result of the pandemic, overall we are finding that activity levels on the supply side of the economy have recovered more quickly than on the demand side, although both are showing some encouraging signs.”

Baillie Gifford China Growth trust, meanwhile, emerged from Witan Pacific, which was taken over by Baillie Gifford in mid-September. Baillie Gifford revamped the portfolio’s strategy and renamed the trust Baillie Gifford China Growth. It appears to already have a strong following given that it has already entered interactive investor’s top 10 list.

The trust will follow a best ideas strategy, with a focused portfolio of between 40 and 80 Chinese companies. This will include both listed and unlisted stocks from across the market-cap spectrum. It is managed by Sophie Earnshaw and Roderick Snell on Baillie Gifford’s emerging markets team. The pair manage the open-ended Baillie Gifford China fund, while Snell also runs the Baillie Gifford Pacific fund and is deputy on Pacific Horizon (LSE:PHI).

International Biotechnology Trust (LSE: IBT) also entered the top in October. In a recent podcast with interactive investor, investment manager Alisa Craig explains how Covid-19 has shone a positive light on the sector

Elsewhere, while there was plenty of movement in the top 10 during the month, Scottish Mortgage (LSE: SMT) once again kept its place at the top of the pile as the most popular trust among interactive investor’s customers. The trust remains in a rich vein of form (up 98% over the past year), driven by the performance of some of its top 10 technology holdings including Tesla (NASDAQ:TSLA), Amazon (NASDAQ:AMZN)Tencent (SEHK:700) and Alibaba (NYSE:BABA)

The global trust is likely to see performance further benefit from one of its unlisted holdings – Ant Group – which is expected to be the biggest IPO of all time when the firm dual-lists on the Shanghai and Hong Kong stock exchanges later this week (5 November). 

Second place in the top 10 was Fidelity China Special Situations, followed by Allianz Technology (LSE: ATT) in third position.

Four other trusts kept their top 10 status, but slipped down the rankings. Baillie Gifford Shin Nippon (LSE: BGS) and Edinburgh Worldwide (LSE: EWI) both fell two places to sixth and seventh., while City of London (LSE: CTY) and Baillie Gifford US Growth (LSE: USA) declined three positions to ninth and 10th.

The three trusts that exited the top 10 were: Polar Capital Technology Trust (LSE: PCT), Monks (LSE: MNKS) and Murray International (LSE: MYI)

Top 10 most-popular trusts: October 2020 

  Trust Sector Rank change from September One-year performance to Nov 1 (%) Three-year performance to Nov 1 (%)
1 Scottish Mortgage Global no change 97.8 125.7
2 Fidelity China Special Sits Asia Pacific ex Japan +7 75.8 65.4
3 Allianz Technology Technology & Media -1 60.7 113.6
4 JP Morgan China Growth & Income Asia Pacific ex Japan new entry 106.1 117.8
5 Bailie Gifford China Growth Asia Pacific ex Japan new entry 37.9* 45.3*
6 Baillie Gifford Shin Nippon Japan -2 36.9 51.1
7 Edinburgh Worldwide Global Smaller Companies -2 60 106.2
8 International Biotechnology Trust Biotechnology & healthcare new entry 33.8 46.4
9 City of London UK Equity Income -3 -21.8 -17.2
10 Baillie Gifford US Growth North America -3 100 N/A**

Source: Interactive investor. Note: the top 10 is based on the number of “buys” during the month of October.

* Bear in mind this trust changed its approach and name in mid-September 2020. Before then it was Witan Pacific. 

** Insufficient track record as trust was launched in March 2018. 

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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