Top 10 most-popular investment trusts: August 2022
1st September 2022 11:39
by Kyle Caldwell from interactive investor
The three new entrants to the top 10 indicate that investors are adding protection to their portfolios.
Despite a strong summer for stock markets, investors are not getting carried away and caution continues to prevail.
This is reflected in the three new entrants to the top 10 table of the most-bought investment trusts on the interactive investor platform.
The first two invest in defensive areas: infrastructure and utilities. Both sectors have predictable long-term cash flows, which are recession-resilient qualities. Renewables Infrastructure Group (LSE:TRIG) was the eighth most-bought trust in August, while Ecofin Global Utilities & Infrastructure (LSE:EGL) was ninth. The duo have seen their strategies shine over the past year, up 21.3% and 28.8% respectively.
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Infrastructure and utilities are examples of “real assets”, which have historically acted as long-term hedges against inflation. As part of a diversified portfolio, real assets can help to reduce risk alongside generating income. Such assets tend to increase in value when there is inflation due to being government-backed. With inflation running at its highest level in decades, it isn’t a surprise to see such trusts proving popular.
The third new entry in the top 10 table is Britain’s oldest investment trust, F&C Investment Trust (LSE:FCIT), which will return to the FTSE 100 index in the coming weeks after a 13-year absence.
The trust, a member of interactive investor’s Super 60 investment ideas, has won promotion following a strong share price rally since mid-June, up 13.3%.
F&C’s promotion, based on closing prices on 30 August, was announced yesterday evening by global index provider FTSE Russell. It will join the FTSE 100 mid-month.
F&C is a global multi-manager trust that offers a one-stop shop for investing. It is managed in a conservative manner, reflected in the portfolio being highly diversified, with around 400 holdings. This diversification, and the fact that it is a consistent income payer, having increased dividends for 51 consecutive years, makes the trust a potential core holding for investors.
Most of the other seven trusts in the top 10 are also conservatively managed or invest in defensive assets. Three wealth preservation trusts remain in the top 10: Personal Assets (LSE:PNL), Capital Gearing (LSE:CGT) and Ruffer (LSE:RICA), in fifth, sixth and 10th place. For some time, each trust has been positioning for a sustained period of higher inflation. A recent ii analysis looked under the bonnet to explain how the investment approaches of the three trusts differ.
Another conservatively managed trust in the top 10 – in second place – is City of London (LSE:CTY). In a video interview with interactive investor last month, fund manager Job Curtis explained that he has “quite a conservative personality”, adding that “with any fund manager the portfolio will reflect the personality of the fund manager to a degree”.
Curtis said: “I like companies with good cash generation and particularly in cyclical sectors. I like strong balance sheets. I don't like a combination of a company with high gearing or leverage or debts in a cyclical sector, that can be very dangerous in an economic downturn.
“Overall, City’s portfolio is quite conservative. I mean, if it’s a race between a tortoise and the hare, we are more of a tortoise than a hare.”
- Watch the video with Job Curtis here: three cheap shares I’ve bought for City of London Investment Trust
- Watch the video with Job Curtis here: two FTSE 100 high-yielding shares that stand out from the crowd
The trust, which invests mainly in FTSE 100 dividend-paying shares, has raised its dividend for 56 consecutive years. Its dividend yield is 4.9%.
Greencoat UK Wind (LSE:UKW) rose one place to third. This specialist real asset fund owns wind farms throughout the UK. Given the nature of its income stream, the board said that it intends to continue increasing its dividend in line with retail price index (RPI) inflation.
Commodities are another example of a real asset that’s been proving popular among investors, reflected by BlackRock World Mining(LSE:BRWM) occupying fourth place in our table. The trust invests in a worldwide portfolio of mining and metal securities.
Finally, remaining in the top spot as the most-bought trust for the month was Scottish Mortgage (LSE:SMT). The global growth trust, managed by Baillie Gifford, saw its share price slip back into the red in August, having returned nearly 20% in July. Year-to-date, the trust’s share price is down 39.3, but its longer-term numbers are ahead of the average global trust. Over three and five years, its returns stand at 56.8% and 90.6%, versus 34.7% and 59.2% for its peer group.
The three trusts exiting the top 10 this month are Henderson Far East Income (LSE:HFEL), JLEN Environmental Assets Group (LSE:JLEN) and European Assets (LSE:EAT).
Top 10 most-popular trusts in August 2022
| Rank | Trust | Change from July | One-year performance to 31 August 2022 (%) | Three-year performance to 31 August 2022 (%) |
|---|---|---|---|---|
| 1 | Scottish Mortgage | No change | -40.9 | 56.8 |
| 2 | City of London | No change | 5.6 | 13.5 |
| 3 | Greencoat UK Wind | Up one | 33.4 | 37.3 |
| 4 | BlackRock World Mining | Down one | 16.9 | 110.4 |
| 5 | Personal Assets | Up two | 0.5 | 18.8 |
| 6 | Capital Gearing | Down one | 2.5 | 20.9 |
| 7 | F&C Investment Trust | New entry | -1.3 | 30.2 |
| 8 | The Renewables Infrastructure Group | New entry | 21.3 | 30.7 |
| 9 | Ecofin Global Utilities and Infrastructure | New entry | 28.8 | 76.1 |
| 10 | Ruffer Investment Company | Down four | 6 | 39.1 |
Source: Fe FundInfo, 31 August 2022. Note: the top 10 from interactive investor is based on the number of “buys” during the month of August.
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