Interactive Investor

May's 10 most-bought trusts

4th June 2015 16:33

Rebecca Jones from interactive investor

Scottish Mortgage, a Money Observer Rated Fund in the global growth group, was the most-bought trust in May after being temporarily knocked off of the top spot by the Woodford Patient Capital Trust in April, according to data from Interactive Investor.

The Woodford Patient Capital Trust moved down to third most-bought trust in May after its initial offer period in April raised £800 million of assets - the most a UK listed investment trust has raised in an initial issue.

The trust moved to an instant premium when it began trading on 21 April and is now the only trust in the UK all companies sector to trade on a share price premium to net asset value (NAV) (8.1%). Excluding Woodford Patient Capital, the average UK all companies trust is trading on a discount of 9.8%.

Retaking the throne is Scottish Mortgage, which, before last month, had been the most-bought trust on Interactive Investor for 14 consecutive months.

High premium

This reflects the fund's strong performance over the past decade, during which it has delivered consistent first-quartile annual returns. In the 10 years to 4 June it has returned 375% in share price terms, making a £1,000 initial investment worth £4,748.17 today.

Commenting on the switch, Rebecca O'Keeffe, head of investing at Interactive Investor, says: "Scottish Mortgage has regained its top spot as the high premium that comes with Woodford Patient Capital has seen it slip into third. How much to pay for a popular trust is a key question for investors, but some investors will view the current Woodford premium as too high."

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The Biotech Growth Trust was the second most-bought trust in May, again retaking its place after a one-month absence. This also reflects some phenomenal share price growth, with the trust returning a staggering 771% over the 10 years to 4 June.

After trading on a share price to NAV premium for much of 2014, the trust has now moved to a 5.5% discount as some investors have taken profits after three years of stellar performance in the sector.

Finsbury Growth & Income, a Money Observer Rated Fund in the UK equity income group, was the fourth most-bought fund in May, pushed out of its usual place as third most bought by Woodford.

Managed by Nick Train - another asset management star - since 2000, the trust is a consistent top performer and has returned more than any other UK equity income trust over 10 years (228%) to 4 June.

FellowI Rated Fund Witan (also in the global growth group) was the fifth most-bought fund in May as its chief executive Andrew Bell continues to turn the trust around via an outsourced, multi-manager approach that has been in place since 2011.

Small and mighty

Making its first appearance in Interactive Investor's top 10 since May 2014 is Money Observer Rated Fund Henderson Smaller Companies, which was the sixth most-bought fund in May.

Riding the wave of good sentiment that is washing over small and medium-sized companies following a market rout in 2014, the trust has delivered an impressive 14.3% in the month to 4 June.

This makes it the best performer among the top 10 by a country mile and has helped to narrow its discount to 8.8%, up from a 12-month average of 13.6%.

Its long-term record also remains exemplary, with manager Neil Hermon delivering 368% in share price growth in the 10 years to 4 June and 293% in NAV growth.

O'Keeffe comments: "Post-election, UK smaller companies have staged a sharp revival, as expectations of continued government and central bank support for small and medium sized enterprises has given the sector a boost. This is especially evident in Henderson's return of over 14% in May."

UK equity income stalwart The City of London Investment Trust (another Money Observer Rated Fund) was the seventh most-bought fund in May thanks to decades of steady capital and dividend growth while BlackRock World Mining was the eighth most bought despite a seemingly never ending period of losses.

Money Observer Rated Fund Jupiter European Opportunities was the ninth most-bought fund in May as manager Alex Darwall continues to drive strong growth in difficult markets, while its Rated Fund compatriot in the Asia equities group, Fidelity China Special Situations, was the 10th most bought as Dale Nicholls proves a worthy replacement to the fund's founder, investment legend Anthony Bolton.

May's 10 most-bought trusts
RankTrustSectorOne-month share price total return (%)Three-year share price total return (%)
1Scottish Mortgage*Global3.3127.4
2Biotech GrowthBiotechnology & healthcare6.7231.6
3Woodford Patient CapitalUK all companies4.6n/a
4Finsbury Growth & Income*UK equity income3.496.5
5Witan*Global2.4107.8
6Henderson Smaller Companies*UK smaller companies14.3161
7City of London*UK equity income3.870
8BlackRock World MiningCommodities & natural resources-3-37.4
9Jupiter European Opportunities*Europe4.2123.1
10Fidelity China Special SituationsCountry specialist: Asia Pacific2.4147
*denotes a Money Observer Rated Fund

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.