Scottish Mortgage’s long run as the most-bought investment trust each month among interactive investor customers has come to an end.
The FTSE 100-listed global equities portfolio, which seeks to identify exceptional growth companies, had been in pole position since June 2019. However, last month it was knocked into second place by City of London.
What hasn’t changed is that Scottish Mortgage (LSE:SMT) remains hugely popular among our customers, having only dropped one place to second in the rankings. Its popularity has not been dented by its disappointing performance over the past couple of years. Shareholders are nursing a 10.5% share price loss this year, which follows a steep 40% fall in 2022. At a recent investment conference, the trust’s deputy fund manager Lawrence Burns argued that its volatile share price is a vital part of delivering long-term returns and an expected part of the way that he manages money.
However, as part of a wider trend that’s been playing out for around two years, growth strategies have been losing out to income strategies in the popularity stakes, reflected in October by City of London (LSE:CTY) pipping Scottish Mortgage to top spot.
The demand for income is intensifying as investors attempt to protect their portfolios against high inflation. As a result, they are increasingly turning towards funds and investment trusts offering attractive yields.
City of London, which mainly invests in dividend-paying FTSE 100 companies, yields 5.4%. The trust, which has been overseen by Job Curtis since 1991, is conservatively managed and a consistent income payer, having increased dividends every year for 57 years. City of London regularly appears towards the top of our most-bought investment trust rankings, but it has now claimed the top spot.
- City of London: our ultimate backstop to keep paying a rising income
- Greencoat UK Wind: interest rate rises have left us grossly underpriced
The demand for high income is also evident in the rest of the top five most-bought trusts, with Greencoat UK Wind (LSE:UKW), BlackRock World Mining Trust (LSE:BRWM) and Merchants Trust (LSE:MRCH) all featuring. The trio offer respective yields of 6.4%, 7.4%, and 5.7%. Merchants, which is fourth in the rankings, is one of three new entries in October.
Another popular choice is JPMorgan Global Growth & Income (LSE:JGGI), yielding 4%, while Gore Street Energy Storage Fund (LSE:GSF) and HICL Infrastructure (LSE:HICL) were the other two newcomers in October. The duo, which both invest in alternative assets, an area that’s suffered due to higher interest rates, have respective yields of 12.3% and 6.9%.
Bear in mind that high yields are not guaranteed, and in some instances they can be a warning sign that the income on offer is not sustainable. In addition, while high yields offer investors the prospect of higher income today, there are no guarantees that this will result in market-beating returns from a total return perspective – when both capital and income are combined.
Top 10 most-popular trusts in October 2023
|Ranking||Investment trust||Change from September||One-year return (%)||Three-year return (%)|
|1||City of London||Up two||-0.3||38.9|
|2||Scottish Mortgage||Down one||-11.6||-34.8|
|3||Greencoat UK Wind||Down one||-0.9||18.5|
|5||BlackRock World Mining||Up two||-5.3||60.0|
|6||Alliance Trust||Up two||6.7||31.3|
|7||JPMorgan Global Growth & Income||Down one||13.5||52.5|
|8||Gore Street Energy||New entry||-41.1||-30.6|
|9||HICL Infrastructure||New entry||-21.9||-20.3|
|10||F&C Investment Trust||Down one||-4.8||28.1|
Performance data sourced from FE Fundinfo. Performance data to 31 October 2023. Rankings are based on the number of "buys" during October 2023.
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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