India’s stock market has been on a tear of late, which has not passed investors by, with India Capital Growth (LSE:IGC) one of three new entries in our top 10 most-bought investment trust league table in September.
India Capital Growth, which was the fourth most-bought trust, focuses on mid- and small-cap companies. Our top 10 rankings are based on the number of buys among interactive investor customers.
India has plenty of attractions as an investment destination. It has a young population, with around a quarter of the world’s under-25s. This young population is part of an expanding middle class, which is expected to fuel economic growth in the decades to come. In addition, Prime Minister Narendra Modi’s reforms, such as the unification of taxes and demonetisation, are expected to benefit the economy.
Over the past year, India Capital Growth is up 30.6% in share price total return terms, while over three years it has gained 126%. Its three-year returns are the highest among the top 10 most-bought investment trusts, just pipping 3i Group (LSE:III) to the top spot, which gained 124.1% over the period.
India Capital Growth’s one-year returns are only bettered in the top 10 by 3i Group, another new entrant. The private equity trust has been producing stellar returns in the rising interest rate environment, which has negatively impacted investor sentiment for the sector. Its one-year returns of 96% are vastly ahead of all other private equity trusts, with the second- and third-best performers in the sector, Literacy Capital (LSE:BOOK) and CT Private Equity Trust (LSE:CTPE), up 30.8% and 27.4%.
A key driver of 3i’s performance has been a notable valuation uplift for its biggest private equity holding, Action, the Dutch non-food discount retailer. 3i last appeared in our top 10 table in May 2023.
In contrast, the other new entrant, Regional REIT (LSE:RGL), has been under the cosh, with its share price halving over the past year. As a consequence, its discount has notably widened and is currently -59.8%. This compares to a 12-month average discount of -28%.
Property is deeply out of favour due to higher interest rates, which has increased the appeal of “risk-free” returns on cash and boosted bond yields.
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Scottish Mortgage, the global equity trust, which invests in disruptive businesses making clever use of technological innovations, has seen its performance struggle over the past two years. Performance hasn’t been helped by rising interest rates, which have downgraded the valuations of growth stocks that promise future profits.
However, this hasn’t dented its popularity, and Scottish Mortgage continues to hold first place in our top 10, a position that it has occupied since June 2019.
In second place is Greencoat UK Wind. The renewable infrastructure investment trust managed by Stephen Lilley aims to provide investors with a yearly dividend that increases in line with RPI inflation. This aim has successfully been achieved each year since the trust launched in 2013.
City of London, which has been managed by Job Curtis since 1991, predominately invests in dividend-paying FTSE 100 firms. Curtis adopts a conservative approach in focusing on companies with good cash generation. City has raised its dividends for 57 years in a row.
Both Lilley and Curtis recently visited our recording studio to make the case for their respective strategies. Watch the interviews by following the two links below.
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Both are no strangers to our top 10, with JPMorgan Global Growth & Income adopting a total return approach, aiming to outperform the MSCI All Country World Index over the long term.
Meanwhile, BlackRock World Mining invests in natural resources stocks. The need to decarbonise and transition to renewable energies is a long-term trend that’s a potential tailwind for this trust, which owns mining companies involved in battery metals.
Completing the top 10, in eighth and ninth place, are multi-manager strategies Alliance Trust (LSE:ATST) and F&C Investment Trust (LSE:FCIT). Our recent article (link below) compared their approaches and examined performance.
Top 10 most-popular investment trusts in September 2023
|Ranking||Investment trust||Change from August||One-year return (%)||Three-year return (%)|
|1||Scottish Mortgage (LSE:SMT)||No change||-13.9||-31.8|
|2||Greencoat UK Wind (LSE:UKW)||No change||-1.9||21.6|
|3||City of London (LSE:CTY)||No change||10.7||45.5|
|4||India Capital Growth (LSE:IGC)||New entry||30.6||126|
|5||Regional REIT (LSE:RGL)||New entry||-50.8||-45.5|
|6||JPMorgan Global Growth & Income (LSE:JGGI)||Down one||18.4||49.8|
|7||BlackRock World Mining Trust (LSE:BRWM)||Down one||10.3||70.8|
|8||Alliance Trust (LSE:ATST)||Down one||15.4||34.7|
|9||F&C Investment Trust (LSE:FCIT)||Down five||-0.4||34.7|
|10||3i Group Ord (LSE:III)||New entry||96||124.1|
Performance data sourced from FE Fundinfo. Data to 1 October 2023. Rankings are based on the number of "buys" during September 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.
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.