Ian Cowie: my winners and losers in third quarter of 2024

Billions wiped off the stock market value of big American technology businesses in August’s flash crash, plus the surprising strength of sterling, must have hurt many British investors overseas during the third quarter of this year.

• Invest with ii: Buy Investment Trusts | Top UK Shares | What is a Managed ISA?

However, helped by a takeover bid and some other special situations, 13 of my 20 investment trusts delivered positive returns during the third quarter (Q3).

The laggards

Never mind the good news, I know that some of you are only here to watch me fall off the wire, so let’s start with the stinkers. Step forward, Schroders Capital Global Innovation Trust Ord (LSE:INOV), which defies nominative determinism by continuing to be listed in the Association of Investment Companies (AIC) “Growth Capital” sector, despite destroying a chunk of mine.

Nearly 10 years after I subscribed £1 per share at launch, they trade around 10p this week. Go on, laugh if you like. Any hopes of “reverse Newtonianism” - or the belief that what goes down must come up - were dashed again during Q3 so far when INOV turned £1,000 into £840.

It was even worse over the past year, when the outcome on the same original investment was £690. So, it might be worth pointing out that the original aim of this fund was to commercialise British biotechnology start-ups, just like the government wants company pensions to do in the near future. You have been warned.

• Listen here: 100th episode special: the Terry Smith interview
• Sign up to our free newsletter for share, fund and trust ideas, and the latest news and analysis

More surprisingly, my second-worst investment trust during Q3 was also one of my best long-term performers; Polar Capital Technology Ord (LSE:PCT). Mr Market suffered a bout of vertigo with digital high-flyers including the chipmaker NVIDIA Corp (NASDAQ:NVDA), the software giant Microsoft Corp (NASDAQ:MSFT) and the iPhone-maker Apple Inc (NASDAQ:AAPL).

Even so, I am surprised to see PCT shrink £1,000 into £900 over the past three months. Thank heavens the one-year return is £1,344 and, when this summer’s stock market storm is forgotten, I expect normal service to be resumed.

VinaCapital Vietnam Opportunity Fund Ord (LSE:VOF) was another disappointment during the last quarter, shrinking the usual £1,000 at outset to £938 now. Instead of gaining from the cold war between America and China, as I had hoped, VOF seems to be suffering collateral damage.

BlackRock Latin American Ord (LSE:BRLA) deserves a dishonourable mention for turning £1,000 into £950 during Q3 and £859 over the past year. No wonder City cynics joke that Brazil is the country of tomorrow - and always will be.

The winners

On a happier note, Tufton Oceanic Assets Ord (LSE:SHIP), the marine leasing specialist, delivered £1,085 during Q3 and a buoyant £1,449 over the year. It deserves a higher profile.

Canadian General Investments Ord (TSE:CGI) gained from underlying holdings, which include the railway Canadian Pacific Kansas City Ltd (TSE:CP) and self-descriptive West Fraser Timber Co.Ltd (TSE:WFG), to end the quarter with £1,086 and the year with £1,122. If only they could sort out withholding tax on their dividends with something similar to the Americans’ W-8BEN form.

Ecofin Global Utilities & Infrastructure Ord (LSE:EGL), my most valuable investment trust holding, came second over the past three months with £1,097 and £1,203 over the year. Despite also delivering 4.3% dividend income, rising by 4% per annum over the past five years, it remains priced -12% below its net asset value.

Tritax EuroBox Euro Ord (LSE:BOXE), the specialist in Continental warehouses which seeks to gain from online shopping, did best with a total return of £1,221 during Q3 and £1,491 over the year. An “expression of interest” from the private equity outfit Brookfield seems to have been trumped by a £552 million all-share recommended offer from the British warehouse group Segro (LSE:SGRO). 

• Why these funds are consistently popular with investors
• The funds most at risk of AIM stocks losing IHT relief

Nick Britton, research director of the AIC, told me: “The average investment trust saw a modest 1.5% return in Q3.

“The first interest rate cut from the Bank of England in four years helped add some zing to UK-focused investments, with the residential property sector up 18% and the commercial sector up 11% in the quarter. 

“Outside the UK, performance was more mixed, with a strengthening pound not helping sterling investors. Uncertainty about the US election proved to be a drag on the technology sector, which was down 10%, and the global and North America sectors were both down 4%.”

In an increasingly uncertain world, diminishing risk by diversification - or spreading our money over many different companies, countries and currencies - feels more comforting than ever. Never mind the macroeconomics, investment trusts help cushion us from shocking setbacks and gain from wealth creation, wherever it may occur.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie is a shareholder in Apple (AAPL), BlackRock Latin American (BRLA), Canadian General Investments (CGI), Ecofin Global Utilities and Infrastructure (EGL), Microsoft (MSFT), Polar Capital Technology (PCT), Schroders Capital Global Innovation (INOV), Tritax Eurobox (BOXE), Tufton Oceanic Assets (SHIP), and VinaCapital Vietnam Opportunity (VOF) as part of a global portfolio of investment trusts and other shares.

Ian will be away next week, returning on 10 October 2024.