Top 10 most-popular investment trusts: August 2024

Two investment trusts that have regularly appeared in our most-bought tables over the years, but which have been absent since May, have made a return to the top 10.

BlackRock World Mining Trust (LSE:BRWM) re-entered the ranking in ninth place. The commodity-focused portfolio is highly regarded due to the experience of Evy Hambro and Olivia Markham, its fund management team.

Performance over one and three years has been subdued, but over five years returns have been in strong. Its short-term performance has been hampered by concerns over the outlook for China’s economy, which has caused many commodity prices to decline. China is the dominant buyer in many commodity markets. 

F&C Investment Trust Ord (LSE:FCIT), a multi-manager trust that outsources stock picking to a selection of fund managers, returned to the table in 10th place.

The UK’s oldest investment trust is highly diversified with more than 400 holdings and is regarded as a potential one-stop shop for beginner investors. The global portfolio mainly uses in-house managers from fund firm Columbia Threadneedle. It is managed by Paul Niven, who decides on the asset allocation and gearing level.

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Exiting the top 10 table were Henderson Far East Income (LSE:HFEL) and NextEnergy Solar (LSE:NESF). The former only entered the top 10 last month, while the latter has been in the rankings since May. Both have high yields, which attract investors.

At the top end of the table, the top three positions were unchanged. Scottish Mortgage (LSE:SMT) retains pole position. It invests in global businesses, including up to 30% in private companies, that are tapping into technological advancements. Over one year, its share price is up 21.9%, but losses of -33.8% over three years are sizeable. This is due to its investment style suffering amid rising interest rates.

The upturn in performance can in part be explained by technology shares performing well and a share buyback plan succeeding in narrowing the gap between the share price and the net asset value (NAV), the value of the trust’s investments.

Greencoat UK Wind (LSE:UKW) held firm in second place. The investment trust aims to provide investors with a yearly dividend that increases in line with RPI inflation. This has successfully been achieved each year since the trust launched in 2013. Its dividend yield stands at 7.1%.

Unchanged in third place, JPMorgan Global Growth & Income (LSE:JGGI) has a total return approach, aiming to outperform the MSCI All Country World index over the long term. It is “style neutral”, meaning it does not favour a particular category of stocks, such as value or growth. 

Climbing up from seventh to fourth place was City of London (LSE:CTY). Managed by Job Curtis since 1991, it predominately invests in dividend-paying FTSE 100 firms. Curtis adopts a conservative approach by focusing on companies with good cash generation. City has raised its dividend for 57 years in a row, making it one of 10 investment trusts with a track record of more than 50 years of income increases.

City of London has a market-beating dividend yield of 5%. In an video interview with interactive investor last month, Curtis explained why he is bullish on the prospects for UK banks, and said that he has been dialling down exposure to overseas stocks (which can be up to 20% of assets), including offloading shares in Microsoft.

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Slipping one place to fifth was Alliance Trust (LSE:ATST), another multi-manager strategy. Last month, it was announced that Alliance Trust and Witan have proposed to join forces to create Alliance Witan, which would swell net assets to around £5 billion.

Alliance Witan intends to adopt Alliance Trust’s strategy of investing in external fund managers who pick 10 to 20 of their best stock ideas. Both Alliance Trust and Witan have multi-manager structures in which stock picking is outsourced. The merger is expected to mean Alliance Witan will be of sufficient size to enter the FTSE 100 index.

Tech duo Polar Capital Technology (LSE:PCT) and Allianz Technology (LSE:ATT) have slightly dropped down the rankings, to sixth and eighth place respectively. Polar Capital Technology owns five of the seven so-called Magnificent Seven US tech giants in its top 10 holdings, excluding Amazon.com Inc (NASDAQ:AMZN) and Tesla (NASDAQ:TSLA). Allianz Technology holds six of the seven in its top 10, with Tesla the outlier. As well as AI, another key sector for both trusts is cybersecurity.

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The biggest US technology shares have been on a strong run of performance over the past decade, barring 2022 when share prices came off the boil due to interest rate rises. 

However, since the start of 2023 share prices have accelerated again due to investor excitement over the potential for artificial intelligence (AI) to disrupt various industries. 

Advancing one position to seventh was Pershing Square Holdings (LSE:PSH). The trust is managed by star investor Bill Ackman, who oversees a concentrated portfolio of US-listed stocks. Performance has been impressive, the best among the top 10 over five years with gains of 50.6%, but it remains on a sizeable discount of -26.4%.

Ackman seeks companies that are conservatively financed, have predictable recurring cash flows, and high barriers to entry. Two recent new purchases are Nike and Canadian asset manager Brookfield Corporation.  

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Top 10 most-popular investment trusts in August 2024 

Source: FE Analytics. Performance data to 29 August 2024. Rankings are based on the number of “buys” during August 2024.