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Most purchased investment trusts in December 2020
Trust | Sector | Rank change from November | One-year performance to 1 Jan 2021 (%) | Three-year performance to 1 Jan 2021 (%) | |
---|---|---|---|---|---|
1 | Scottish Mortgage | Global | No change | 110.5 | 174.8 |
2= | Edinburgh Worldwide | Global smaller companies | Up 6 | 87.7 | 142.2 |
2= | Monks | Global | Up 8 | 42.1 | 79.2 |
4 | Pacific Horizon | Asia Pacific ex Japan | Up 1 | 128.6 | 139.1 |
5 | Pershing Square Holdings | Hedge funds | New entry | 87.2 | 168.3 |
6 | Fidelity China Special Situations | Asia Pacific ex Japan | Down 3 | 68.6 | 69.9 |
7 | Allianz Technology | Technology & Media | No change | 80.3 | 154.1 |
8 | BlackRock World Mining | Commodities & natural resources | New entry | 46.7 | 56.3 |
9 | Baillie Gifford US Growth | North America | New entry | 133.5 | N/A* |
10 | JP Morgan China Growth & Income | Asia Pacific ex Japan | Down 6 | 97.5 | 136.6 |
Source: Interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of December 2020. *Insufficient track record.
Most purchased investment trusts in November 2020
Ranking | Trust | Sector | Rank change from October | One-year performance to Dec 1 (%) | Three-year performance to Dec 1 (%) |
---|---|---|---|---|---|
1 | Scottish Mortgage | Global | no change | 108 | 152.8 |
2 | Baillie Gifford China Growth | Asia Pacific ex Japan | Up 3 | 54.4 | 65.1 |
3 | Fidelity China Special Situations | Asia Pacific ex Japan | -1 | 77.4 | 71.9 |
4 | JP Morgan China Growth & Income | Asia Pacific ex Japan | no change | 101.5 | 109.2 |
5 | Pacific Horizon | Asia Pacific ex Japan | new entry | 119.9 | 122.7 |
6 | Baillie Gifford Shin Nippon | Japan | no change | 38.7 | 47.9 |
7 | Allianz Technology | Technology & Media | -4 | 67.9 | 134.4 |
8 | Edinburgh Worldwide | Global Smaller Companies | -1 | 61.2 | 127.7 |
9 | City of London | UK Equity Income | no change | -12.6 | -3.4 |
10 | Monks | Global | new entry | 35.7 | 66.1 |
Source: interactive investor. FE Analytics used for performance figures. Note: the top 10 is based on the number of “buys” during the month of November.
Most purchased investment trusts in October 2020
Rank | Investment trust | AIC sector | Rank change since previous month |
---|---|---|---|
1 | Scottish Mortgage | Global | No change |
2 | Fidelity China Special Sits | Asia Pacific ex Japan | +7 |
3 | Allianz Technology | Technology & Media | -1 |
4 | JP Morgan China Growth & Income | Asia Pacific ex Japan | New entry |
5 | Bailie Gifford China Growth | Asia Pacific ex Japan | New entry |
6 | Baillie Gifford Shin Nippon | Japan | -2 |
7 | Edinburgh Worldwide | Global Smaller Companies | -2 |
8 | International Biotechnology Trust | Biotechnology & healthcare | New entry |
9 | City of London | UK Equity Income | -3 |
10 | Baillie Gifford US Growth | North America | -3 |
Most purchased investment trusts in September 2020
Rank | Investment trust | AIC sector | Rank change since previous month |
---|---|---|---|
1 | Scottish Mortgage | Global | no change |
2 | Allianz Technology | Technology & Media | no change |
3 | Polar Capital Technology Trust | Technology & Media | no change |
4 | Bailie Gifford Shin Nippon | Japan | new entry |
5 | Edinburgh Worldwide | Global Smaller Companies | -1 |
6 | City of London | UK Equity Income | no change |
7 | Bailie Gifford US Growth | North America | 1 |
8 | Monks Investment trust | Global | new entry |
9 | Murray International | Global Equity Income | new entry |
10 | Fidelity China Special Sits | Asia Pacific ex Japan | new entry |
Most purchased investment trusts in August 2020
Rank | Investment Trust | AIC sector | Ranking change since previous month |
1 | Scottish Mortgage | Global | No change |
2 | BlackRock World Mining Trust | Sector Specialist: Commodities & Natural Resources | Up three places |
3 | Polar Capital Technology Trust | Technology & Media | No change |
4 | Allianz Technology | Technology & Media | Down two places |
5 | Worldwide Healthcare | Sector Specialist: Biotechnology & Healthcare | Up two places |
6 | Edinburgh Worldwide | Global Smaller Companies | Down two places |
7 | Murray International | Global Equity Income | New entry |
8 | City of London | UK Equity Income | Down two places |
9 | Personal Assets | Flexible Investment | New entry |
10 | Monks | Global | New entry |
Most purchased investment trusts in July 2020
Rank | Investment Trust | AIC sector | Ranking change since previous month |
1 | Scottish Mortgage | Global | No change |
2 | Allianz Technology | Technology & Media | Up one place |
3 | Polar Capital Technology Trust | Technology & Media | Down one place |
4 | Edinburgh Worldwide | Global Smaller Companies | No change |
5 | Blackrock World Mining Trust | Sector Specialist: Commodities & Natural Resources | Up four places |
6 | City of London | UK Equity Income | Down one place |
7 | Worldwide Healthcare | Sector Specialist: Biotechnology & Healthcare | Down one place |
8 | Baillie Gifford US Growth | North America | New entry |
9 | The Biotech Growth Trust | Sector Specialist: Biotechnology & Healthcare | New entry |
10 | Pacific Horizon | Asia Pacific | New entry |
Most purchased investment trusts in June 2020
Rank | Investment trust | AIC sector | Ranking change since previous month |
1 | Scottish Mortgage | Global | No change |
2 | Polar Capital Technology | Technology & Media | No change |
3 | Allianz Technology | Technology & Media | Up one place |
4 | Edinburgh Worldwide | Global Smaller Companies | Up one place |
5 | City of London | UK Equity Income | Up one place |
6 | Worldwide Healthcare | Biotechnology & Healthcare | Down three places |
7 | Smithson | Global Smaller Companies | No change |
8 | Alliance Trust | Global | No change |
9 | Monks | Global | New entry |
10 | BlackRock World Mining Trust | Commodities & Natural Resources | New entry |
Most purchased investment trusts in May 2020
Rank | Investment trust | AIC sector | Ranking change since previous month |
1 | Scottish Mortgage | Global | No change |
2 | Polar Capital Technology | Technology & Media | No change |
3 | Worldwide Healthcare | Biotechnology & Healthcare | Up four places |
4 | Allianz Technology | Technology & Media | Up one place |
5 | Edinburgh Worldwide | Global Smaller Companies | New entry |
6 | City of London | UK Equity Income | Down four places |
7 | Smithson | Global Smaller Companies | Up one place |
8 | Alliance Trust | Global | Down four places |
9 | The Renewables Infrastructure | Infrastructure | New entry |
10 | Finsbury Growth & Income | UK Equity Income | New entry |
Most purchased investment trusts in April 2020
Rank | Investment trust | AIC sector | Ranking change since previous month |
1 | Scottish Mortgage | Global | No change |
2 | Polar Capital Technology | Technology & Media | Up five places |
3 | City of London | UK Equity Income | Down one place |
4 | Alliance Trust | Global | Down one place |
5 | Allianz Technology | Technology & Media | Up five places |
6 | Finsbury Growth & Income | UK Equity Income | Down two places |
7 | Worldwide Healthcare | Biotechnology & Healthcare | New entry |
8 | Smithson | Global Smaller Companies | Down three places |
9 | Hammerson (REIT) | Unclassified | New entry |
10 | F&C Investment Trust | Global | Minus one |
Investment trust recommendations
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Best investment trusts for income
Investors on the lookout for an investment trust that generates income should firstly consider UK equity income and global equity income trusts, which both invest in dividend paying companies in order to produce an income for shareholders.
Other income options for investors to consider include commercial property and infrastructure.
One of the main advantages in an investment trust or investment company's armoury compared with funds is its ability to hold dividend reserves, which we explain in more detail below in the investment trust FAQs.
As a result of this a number of investment trusts have impressive track records in growing their dividends year in, year out.
Trusts with increasing dividends
The most recent list of investment trust “Dividend Heroes” published annually (16 March 2020) by the Association of Investment Companies (AIC), the trade body for investment trusts, shows that four trusts have now achieved increasing dividends for over 50 years: City of London Investment Trust (one of our Super 60 funds), Bankers Investment Trust, Alliance Trust and Caledonia Investments.
The investment trust industry boasts 21 companies that have raised their dividends for more than 20 consecutive years, plus another 25 companies that have increased their payouts for between 10 and 20 years.
The table below shows the 12 investment trusts that have increased dividends for 40 years or more. Most investment trusts that have achieved this feat invest in global businesses that pay dividends, while the remaining three investment trusts invest in dividend-paying shares listed on the UK market. Please note: figures correct as at 16 March 2020.
Company | Sector | Number of consecutive years dividend increased |
City of London | UK equity income | 53 |
Bankers | Global | 53 |
Alliance Trust | Global | 53 |
Caledonia Investments | Global | 52 |
BMO Global Smaller Companies | Global | 49 |
F&C IT | Global | 49 |
Brunner | Global | 48 |
JPMorgan Claverhouse | UK equity income | 46 |
Murray Income | UK equity income | 46 |
Witan | Global | 45 |
Scottish American | Global equity income | 40 |
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Investment trusts FAQs
What is an investment trust?
Investment trusts, like funds, invest in a 'basket' of underlying assets such as equities, bonds or property. But unlike funds, they are structured as companies listed on the London Stock Exchange. Investors in a trust share in the capital gains (or losses) and in any income payments made.
A fixed number of shares is issued, which raises a fixed amount of money for the manager to invest in a portfolio of assets. The shares are then traded on the stock market. The share price goes up and down according to investor demand and supply, but (unlike open-ended funds) the trust manager's investment plans are not affected by these fluctuations.
How do investment trusts work?
Trusts have two values: the amount the investments themselves are worth in total (the net asset value or NAV), and the trust’s share price on the stock market. When the share price is lower than the NAV per share, this is known as a 'discount' to NAV. When the share price rises above NAV, the trust is trading at a 'premium', meaning investors who buy are paying more than the assets are worth.
If you buy at a discount and that discount reduces or narrows (due to increased shareholder demand, say), your holding could gain in value, even if there's no movement in the underlying NAV. Conversely, the discount could widen if shareholders started selling in numbers, so your holding could lose more value than the underlying assets.
What types of investment trusts are there?
There are various types, but the majority invest in equities. The main regions being UK, US, Europe, Asia Pacific and emerging markets.
A number of trusts simply adopt a global approach, in which the fund manager invests wherever he or she sees fit. Some investment trusts invest for growth, others focus on income, while some mix and match between the two. Others invest in a certain sector, such as biotech.
The other main type, which over the past couple of years has been gaining in prominence, is investment trusts that focus on alternative assets. In 2019 sectors that proved popular included renewable energy, infrastructure, commercial property and private equity.
There are other investment trusts available, including venture capital trusts that invest in small unlisted companies and come with certain extra tax breaks [link], and split capital trusts that issue a number of different types of share.
Can investment trusts’ ability to ‘gear’ improve performance?
Investment trusts are allowed to gear, or borrow to invest. This can improve their performance, but it means they tend to be more volatile than their open-ended peers.
Gearing in a rising market magnifies gains for each shareholder; but if the market falls, investors in a geared trust will suffer greater losses per share.
Simply put, if the manager borrows X to invest and the trust grows, the manager has to repay X plus interest but retains the investment growth as part of the trust's NAV. So if you have £1,000 invested (let's assume a constant share price for now) and the manager gears by 10%, then there is effectively £1,100 working for you.
Now, if that doubles in value to £2,200, the manager pays back the £100 plus, let's say, 1% interest. That leaves you - the investor - with £2,099. If the manager had not geared, you'd only have £2,000.
Conversely, if the same investment halves in value to £550, the manager still has to pay back £101. This magnifies the losses, leaving you with only £449 instead of the £500 you'd have without gearing.
Main advantages and disadvantages when investing in investment trusts
Pros
- Over the long term, investment trusts tend to outperform funds due to their various structural advantages.
- Much more consistent at raising or maintaining dividend payments compared to funds, due to their ability to hold back up to 15% of income generated every year.
- Fixed pool of assets – means fund manager is not distracted by investor money flowing in or out in the short term
- Opportunity to buy a bargain when a trust trades on a wider than usual discount.
- Investment trusts are allowed to gear, or borrow to invest. In a rising market, gearing magnifies gains.
- Overseen by an independent board of directors, who ensure the investment trust is being managed in line with shareholders’ interests.
Cons
- Generally, more volatile than open-ended funds due to the ability to gear and the potential for discounts to widen beyond NAV movements, so expect a bumpier ride.
- In a falling market gearing works in reverse - investors in a geared trust will suffer greater losses per share.
- Investment trusts can trade on a premium – so investors who buy end up paying more than the underlying assets are worth.
- Two layers often considered to make them more complex to understand
- Can be difficult to get information about less commercially focused trusts
Are investment trusts good for beginners?
Internationally diversified global investment trusts with a broad range of underlying investments can form an ideal portfolio core and are perfect for regular monthly investments. Many global and UK trusts are also ideal for income-seekers, because of their ability to smooth dividend payouts over the years.
Also consider investment trusts that adopt a ‘multi-manager’ approach. This means the portfolio is parcelled up, with different segments of the portfolio outsourced to carefully selected external fund managers. One respected trust that invest in this way is F&C Investment Trust, which is one of our Super 60 fund choices.
Do investment trusts pay dividends?
Income-paying investment trusts have a particular attraction for investors because investment trusts don't have to distribute all the income generated every year. Up to 15% can be held back each year, which means they can build up a ‘rainy day’ fund to bolster dividend payouts in leaner years. During the financial crisis, the majority of UK equity income investment trusts were able to either maintain or increase their dividends, as they dipped into their reserves.
Some income-paying investment trusts are labelled ‘enhanced income’ and generally offer higher dividend yields than other income trusts. To achieve a higher dividend yield, enhanced income trusts finance their dividends from capital as well as income.