Interactive Investor

November's 10 most-bought trusts

9th December 2016 11:46

David Brenchley from interactive investor

Woodford Patient Capital saw its popularity wane in November, slipping into fourth place. David Brenchley looks at whether this is a sign of things to come.

Woodford Patient Capital saw its popularity with clients of our sister website Interactive Investor wane in November, despite performance picking up over the previous month.

Demand for the eponymous offering from star fund manager Neil Woodford spiked in June this year, as it moved into second place behind long-time favourite Scottish Mortgage, which still rules the roost.

A tough October, though, looks to have hit that demand and, although the trust's performance has bounced back since Donald Trump's US presidential election victory, it still sits firmly at the bottom of the Association of Investment Companies' (AIC's) UK all companies sector over one year, losing 11.5% as at 1 December. The subdued performance has not gone unnoticed, slipping to fourth most-bought trust last month.

Reigning supreme

In a recent blog post, Woodford admitted the prospect of a Hilary Clinton win in November's election had weighed heavily on sentiment towards healthcare stocks, which represent almost two-thirds of his portfolio. Seemingly proving this point, its performance is now well ahead of sector over the month to 1 December, with a gain of 2.8%.

It has been overtaken by the ever-popular Finsbury Growth & Income, managed by Nick Train, and City of London into second and third places respectively.

Elsewhere, Scottish Mortgage continues to reign supreme over all others, taking the top spot for the 19th consecutive month. The Baillie Gifford-managed trust narrowly missed out on becoming the fourth-ever investment trust to win inclusion into the FTSE 100 index this week.

The trust, managed by James Anderson, has seen its market capitalisation swell to £4.2 billion and looked in pole position to become a blue-chip UK firm. However, a late surge by Smurfit Kappa, a packaging firm, saw it placed onto the reserve list, meaning that if a FTSE 100 firm is taken over before the next reshuffle, due at the end of February, it will be admitted to the index.

Scottish Mortgage has benefited from its holdings in US and Chinese technology firms such as Amazon, Facebook, Alphabet, Alibaba, Baidu and Tencent and is up by an impressive 167.9% over the past five years.

Its short-term performance is much less impressive, losing 6.9% over the past month but longer term it has scope to continue to outperform after shareholders voted to increase the value of its unquoted investments from 15 to 25% recently, allowing Anderson the opportunity to search out further future stockmarket winners.

Global trust Witan slips down into fifth place in the table due to City of London's rise up the chart, both of which are members of the AIC's dividend heroes list, having raised their dividends every year for the past 41 and 50 years respectively.

BlackRock World Mining (sixth) and Biotech Growth (seventh), meanwhile, have switched places since October.

Fundsmith Emerging Equities slips out of the top 10 despite emerging markets coming back into favour over the course of the previous year. Trump's victory, whilst having a positive effect of Woodford's offering, may have an opposite effect on emerging markets, with Woodford himself expecting a negative effect on the region.

In its stead, Foreign & Colonial and Murray International, two other funds with significant emerging market exposure, move up one place each to eighth and ninth respectively.

The new entrant is UK-focused Merchants in 10th place, up from 36th most bought in October. The trust invests predominantly in high-yielding FTSE 100 companies including Royal Dutch Shell, GlaxoSmithKline, BP and HSBC. That quartet accounts for over a quarter of manager Simon Gergel's portfolio.

Merchants was trading on a discount of 9% in early November, as noted by our resident investment trust bargain hunter - this compares to the beginning of 2016, when it was trading at close to net asset value. That discount has narrowed slightly since and now stands at 5.9%.

November's 10 most-bought trusts

RankFundAIC sectorChange since October1m SP total return to 1 Dec (%)3yr SP total return to 1 Dec (%)
1Scottish Mortgage*Global---6.958.7
2Finsbury Growth & Income*UK equity income+1-5.031.2
3City of London*UK equity income+2-2.017.1
4Woodford Patient CapitalUK all companies-22.8n/a
5Witan*Global-1-0.338.8
6BlackRock World Mining*Commodities & natural resources+1-1.8-11.6
7Biotech GrowthBiotechnology & healthcare-110.967.5
8Foreign & Colonial*Global+1-1.146.1
9Murray International*Global equity income+1-2.022.6
10MerchantsUK equity income+263.62.0
Source: FE Trustnet. *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.