Interactive Investor

June's 10 most-bought trusts

6th July 2016 11:54

Kyle Caldwell from interactive investor

Interactive Investor users took advantage of last month's stockmarket turmoil to snap up investment trusts that had slipped to wide discounts.

Henderson Smaller Companies, currently on a 16% discount versus its one-year average of 11%, was one of the most popular bargains. The trust entered the top 10 last month for the first time for more than a year; it last appeared in May 2015.

The trust has been hit harder than most by volatility in financial markets on the back of the Brexit vote, due to the fact that the part of the market it focuses on tends to be more domestically focused.

Over the past month Henderson Smaller Companies is down 9%, in line with the Association of Investment Companies' UK smaller companies sector.

Mid-cap turnaround expected

Some analysts, however, argue that small and mid-cap share price falls have been exaggerated and that in the coming months performance could turn around.

Iain Scouller of broker Stifel says: "Whilst in some of the gloomy scenarios these sectors could be under pressure for some time, we do suspect some of this has been overdone in the knee-jerk reaction."

The other new entry to the top 10 is Merchants Trust. Since our sister magazine Money Observer started keeping tabs on the most popular trusts and funds in January 2014, Merchants' previous best was 13th place in June last year.

Managed by Simon Gergel, the trust is on a wider discount than its one-year average, 6.7% versus 4.6%. Gergel favours the big heavyweights in the FTSE 100 index.

The rest of the top 10 is unchanged, though there has been some movement within it. But the top two remain the same, with Scottish Mortgage once again holding onto its position as the most popular investment trust with clients of Interactive Investor.

The trust, which is managed by James Anderson and is a Money Observer Rated Fund, has been the most-bought trust each month bar one since February 2014. The only time it was knocked off top spot was in April 2015, during Woodford Patient Capital's record-breaking £800 million launch.

In second place is Woodford Patient Capital, which has slipped to a discount of 5.4%. For the majority of the past year the trust has traded on a premium of 5%, or higher.

Movers and shakers

Outside the top two, City of London takes third place, moving up two places from May. The trust is favoured by income investors, thanks to a long track record of year-on-year dividend increases. In March the trust achieved the feat of raising its dividends every year for the past 50 years.

Completing the top five are Finsbury Growth & Income and Witan. Elsewhere the remaining three trusts in the top 10 are: BlackRock World Mining, Jupiter European Opportunities and Biotech Growth.

BlackRock World Mining has been one of the best-performing Money Observer Rated Funds in the first half of 2016, thanks to the fact that 23% of its portfolio is in gold.

It has, however, been a painful couple of years for gold investors. BlackRock World Mining, for instance, is still down 54% over five years. This is why advisers recommend that investors limit their exposure to specialist gold funds to a small part of a diversified portfolio.

The two funds that have exited the top 10 are Bankers and RIT Capital Partners.

June's 10 most-bought trustsRankFundAIC sectorChange since May1m share price total return to 5 July (%)3yr share price total return to 5 July (%)
1Scottish Mortgage*Global--5.464.7
2Woodford Patient CapitalUK all companies---14.9--
3City of London*UK equity income+2-0.418.1
4Finsbury Growth & IncomeUK equity income--2.438.4
5Witan*Global-30.730.8
6BlackRock World Mining*Commodities & natural resources--18.7-24.8
7Jupiter European Opportunities*Europe+1-2.533.2
8Henderson Smaller Companies*UK smaller companiesNew entry-932
9Biotech Growth*Biotechnology & healthcare-2-2-24.4
10MerchantsFlexible investmentNew entry-0.7-2.4
*denotes Money Observer Rated Fund

  

This article was originally published by our sister magazine Money Observer here.

 

 

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