January's 10 most-bought trusts

Global equity investment trust Scottish Mortgage was the most-bought trust on the Interactive Investor platform in January, reigning largely uninterrupted over the top spot for almost two years.

Scottish Mortgage, one of our sister magazine Money Observer's prestigious Rated Funds, has been unseated only once since February 2014. This was in April last year, when it was trumped by Woodford Patient Capital during the latter's record-breaking launch onto the UK stockmarket with £800 million of assets under management.

Since then Woodford Patient Capital has tended to be the second most-bought trust among Interactive Investor clients, and this remained the case in January.

Despite the continuing popularity of its star manager Neil Woodford, however, the trust has underperformed since launch, shedding 23% in share price terms and 16% of its net asset value (NAV) over six months to 4 February.

Underperformance

The trust's underperformance is due mainly to its large exposure to biotechnology companies, which have suffered a volatile period.

Woodford's significant stake in beleaguered US firm Northwest Biotherapeutics has weighed particularly on the portfolio as allegations of poor governance and financial impropriety have seen the company's share price plummet.

Money Observer Rated Fund Finsbury Growth and Income remained firmly in fourth place in January, as the Biotech Growth Trust also held onto fifth place.

City of London - another Rated Fund - climbed three places since December to fifth most-bought trust in January. The trust is a popular income choice, having grown its dividend every year for the past 49 years - the longest record of any UK-listed investment trust.

BlackRock World Mining descended one place to be the seventh most-bought trust in January amid losses caused by persistent declines in global commodity prices.

The trust has made a loss in both share price and NAV terms over most time periods to 4 February, however, its 12% yield means it remains attractive for contrarian income seekers.

Income play

Murray International was the eighth most-bought trust last month, making its first appearance in the top 10 since August. The trust is another to have suffered steep losses in recent years, in this case due to a high weighting in emerging markets.

Over three years to 4 February, Murray International has shed 18.1% in share price terms compared to a 12% gain from the Association of Investment Companies' (AIC's) global equity income sector.

Like BlackRock World Mining, however, the trust pays a substantial yield - 6% - while its share price to NAV discount has widened significantly over the past year to 5.2%. This marks an attractive entry point for investors interested in building emerging market exposure while taking a dividend.

Money Observer Rated Fund RIT Capital Partners was the 10th most-bought trust in January. This is the first time that the £2.5 billion Rothschild family investment vehicle has made the top 10 most-bought list and reflects a strong period of performance.

Over the past three years RIT Capital Partners has delivered 43.4% in share price terms compared to just 20.5% from the AIC's global sector, while over one year it has returned 11.1% compared to an average loss of 2.6% from the sector.

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.