Interactive Investor

Investment trust managers' top stocks

7th May 2015 09:22

Faith Glasgow from interactive investor

Ahead of potential market volatility and buying opportunities for managers in the wake of the general election results, the Association of Investment Companies (AIC) has drilled down into the portfolios of member investment trusts to see which are the most widely held companies.

Unsurprisingly, FTSE 100 companies dominate the list. The five top slots are filled by the five largest corporations in the index - HSBC (held by 52 trusts), Royal Dutch Shell (44), GlaxoSmithKline (41), BP (40) and British American Tobacco (40) - though Shell is actually larger than HSBC in terms of market capitalisation.

"Dividend players dominate the top 10 companies held by UK investment companies, with banks, oil and gas and pharmaceuticals prominent," says Annabel Brodie-Smith, AIC communications director.

However, some of the UK's biggest businesses are notable by their absence from the upper reaches of the AIC list. Lloyds Banking, ranked seventh by size, is joint 17th by popularity, with a place in 22 investment trusts - probably a reflection of its failure to pay dividends since it was bailed out by the taxpayer in 2008. Ninth-placed SABMiller does not figure in the AIC ranking at all.

Conversely, several other companies with a presence in many trust portfolios are actually much smaller in size, being FTSE 250 rather than FTSE 100 members. They include non-standard credit lender Provident Financial Group (13th in the list, held by 26 trusts), Berendsen (16th, held by 23) and Senior (19th, held by 18).

The AIC also identified the trusts with the largest holding in each company, revealing the substantial weightings of some trusts to specific holdings.

Perhaps most notable is the fact that Temple Bar is the investment trust with the single largest holding in each of the top four most popular companies. In total, these four comprise almost a third of the trust's portfolio.

Temple Bar, a Money Observer Rated Fund, has an excellent long-term record but has produced fourth-quartile returns over the past one and three years.

The table also highlights a distinctive high-conviction approach from Money Observer Rated Fund Finsbury Growth & Income, with some meaty allocations including a 9% holding in Unilever, an 8% commitment to Reed Elsevier, 8.5% to Diageo, and almost 7% to Pearson.

"It's interesting when researching potential investment companies to take a look at the top holdings, and this information is available on the AIC's website on the company profile pages," adds Brodie-Smith.

RankCompanyNo. of investment cos holding these sharesInvestment co with largest exposure (% portfolio)
1HSBC52Temple Bar (9.47)
2Royal Dutch Shell44Temple Bar (8.93)
3GlaxoSmithKline41Temple Bar (7.14)
4BP40Temple Bar (6.04)
4British American Tobacco40BlackRock Income & Growth (5.95)
5AstraZeneca36Manchester & London (7.22)
6Vodafone35Schroder Income & Growth (4.30)
7BHP Billiton33Murray Income (3.72)
7Legal & General33Schroder Income & Growth (4.21)
7Unilever33Finsbury Income & Growth (9.04)
8BT31Edinburgh Investment (5.38)
9Imperial Tobacco30Edinburgh Investment (5.70)
10Centrica29Dunedin Income Growth (3.24)
11Rio Tinto28BlackRock Income & Growth (4.24)
11BG Group28Manchester & London (5.37)
12BAE Systems27Edinburgh Investment (4.9)
12Barclays27Schroder UK Growth (4.74)
12Prudential27British & American (6.54)
13Provident Financial26Jupiter European Opportunities (9.09)
14Aviva25City Merchants High Yield (2.64)
15Rolls-Royce24Edinburgh Investment (2.67)
15Standard Chartered24Shires Income (3.79)
15Compass Group24BlackRock Income & Growth (2.78)
16Berendsen23Dunedin Smaller Companies (3.06)
16National Grid23Invesco Income Growth (3.07)
17Sage22Finsbury Income & Growth (6.17)
17Friends Life22BlackRock Income & Growth (3.53)
17Reed Elsevier22Finsbury Income & Growth (8.02)
17Lloyds Banking Group22Fidelity Special Values (3.15)
18Diageo21Fidelity Growth & Income (8.45)
19Amlin20Independent Investment Trust (3.82)
19Lloyds TSB20Invesco Perpetual Enhanced Inc (3.07)
20Pearson18Finsbury Income & Growth (6.79)
20Senior18Lowland (3.98)
20Tesco18Dunedin Income Growth (1.86)

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. 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.