Interactive Investor

June's 10 most-bought trusts

6th July 2015 09:37

Rebecca Jones from interactive investor

Scottish Mortgage, a Money Observer Rated Fund in the global growth category, was the best-selling investment trust in June, having regained the top spot from Woodford Patient Capital in May, according to data from our sister website Interactive Investor.

Baillie Gifford's global generalist vehicle has been the most popular trust among Interactive Investor customers since February 2014. It briefly ceded its place to Woodford Patient Capital during the latter's launch in April, but its strong, consistent performance has remained a strong draw.

Over one, three, five and 10 years to 3 July Scottish Mortgage is the best-performing trust in the Association of Investment Companies' (AIC's) global sector on a net asset value (NAV) basis, returning 237.6% in NAV growth since 3 July 2005.

High premium

On a share price basis over five and 10 years the trust is beaten only by Lindsell Train, due in large part the latter's soaring share price to NAV premium, which now stands at close to 25% - the highest premium of any other mainstream equity investment trust.

Not to be overshadowed is Woodford Patient Capital, which was the second best-selling trust in June following a record-breaking capital raise that saw it launch with £800 million of assets under management in April.

Biotech Growth was the third best-selling trust in June, falling one place from May. It has delivered some of the most impressive returns of any investment trust over the past 10 years (Biotech Growth has delivered 762.5% over 10 years to 3 July) and continues to outperform.

After a brief period trading at a share price premium, Biotech Growth is now trading at a 4.8% discount to NAV; while it is not the cheapest the trust has been over the past year, this is arguably a good entry point for those that still have faith in the biotechnology sector's ability to maintain its strong performance.

Old favourites

The fourth most-bought trust in June was Money Observer Rated Fund in UK equity income category Finsbury Growth and Income, which held onto its place for the third consecutive month. Managed by Nick Train (who also manages Lindsell Train), Finsbury Growth and Income is another strong and consistent performer thanks to Train's high-conviction, brand-led investment style.

Over 10 years to 3 July Finsbury Growth and Income has returned 209% in share price gains, making it the best performer in the UK equity income sector over the period. The trust is also top decile over one, three and five years.

Fellow Money Observer Rated Fund City of London Investment Trust was the fifth most-bought trust in June, rising from seventh in May. A firm favourite with UK equity income investors, City of London has increased its dividend every year for 48 years and currently pays an above-average sector yield of 3.8%.

As a slow and steady performer, it has also delivered respectable growth, having underperformed the sector in share price terms in just three of the last 10 years to 3 July.

BlackRock World Mining was the sixth most-bought trust in June, remaining a perennial favourite with Interactive Investor clients despite mounting losses due to weak commodity markets and write-downs within the trust's portfolio. Over five years to 3 July the trust has shed 37.7%; however its 7.3% dividend yield continues to lure investors.

Money Observer Rated Fund Witan was the seventh most-bought trust as the global growth vehicle continues to go from strength to strength under the leadership of Andrew Bell and his multi-manager mandate.

In the three years to 3 July the trust has delivered a first-quartile share price return of 88% while its share price to NAV discount has narrowed from around 12% in 2012 to a premium of close to 1% today.

European opportunities

The eighth most-bought trust in June was Money Observer Rated Fund in the European equities category Jupiter European Opportunities, up one place from May. Managed by Alex Darwall since its launch in November 2000, Jupiter European Opportunities has consistently outperformed its sector and benchmark.

Darwall has delivered the highest share price returns of any other trust in the Europe sector over one, five and 10 years, and the second highest over three years. In 10 years to 3 July investors have made 311% on their investment in the trust, compared to an average of 185% from the sector.

This has led to the trust trading at a consistent premium; however, as European markets have wobbled over the crisis in Greece, the trust has fallen to a 0.7% discount, suggesting an attractive entry point for new investors.

European smaller company trust European Assets was the ninth most-bought fund in June. Another consistent outperformer in both benign and stormy markets, this Money Observer Rated Fund has also been in strong demand over the past year, trading on a fairly consistent premium since last November.

Unfortunately for new investors, European Assets continues to trade above par. However with shares just 1% above NAV, this arguably still offers value considering the trust's performance history and some strong prospects for European markets (excluding Greece) following the implementation of quantitative easing.

The 10th most-bought trust in June was Henderson Smaller Companies, a Money Observer Rated Fund in the UK smaller companies category, which fell from sixth most bought in May after re-entering the table for the first time since May 2014.

The UK smaller companies trust fell out of favour with investors in 2014 as small and medium-sized companies suffered a sustained sell-off in the first half of the year. However as the sector has picked up the trust has soared, returning close to 30% in share price gains in the year to 3 July as manager Neil Hermon's well-worn strategy proves resilient.

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.

June's 10 most-bought funds
RankTrustAIC sector
1Scottish Mortgage*Global
2Woodford Patient CapitalUK all companies
3Biotech GrowthBiotechnology & healthcare
4Finsbury Growth & Income*UK equity income
5City of London*UK equity income
6BlackRock World MiningCommodities & natural resources
7Witan*Global
8Jupiter European Opportunities*Europe
9European Assets*European smaller companies
10Henderson Smaller Companies*UK smaller companies
*denotes a Money Observer Rated Fund