Top 10 most-popular investment trusts: September 2024

Scottish Mortgage (LSE:SMT) has been knocked off pole position for the first time in nearly a year, with BlackRock World Mining (LSE:BRWM) the most-bought investment trust among our customers in September.

The commodity-focused portfolio has been out of form since the start of 2023, with its share price down -11.5% over that period, according to FE fundinfo. A slowdown in China’s economy has been a headwind, and has hit demand for some commodities.

However, given the trust’s climb up the table to first place, a number of investors are seemingly spying an opportunity and hoping for a change in fortunes.

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BlackRock World Mining aims “to provide a diversified investment in mining and metal assets worldwide”. Copper and gold are favoured, accounting for around a quarter each.

Longstanding fund manager Evy Hambro observes that “mining companies have focused on capital discipline in recent years, meaning they have opted to pay down debt, reduce costs and return capital to shareholders, rather than investing in production growth”.

Also of note is two new entrants to the top 10 table this month: 3i Group  (LSE:III) and Supermarket Income REIT (LSE:SUPR).

The former has been the standout performer in the private equity sector over one, three and five years, with its successful stake in Dutch discount retailer Action a key performance driver. However, 3i Group is trading on a huge premium of 51.5%. Over the long term, such huge premiums tend not to be sustainable.

Supermarket Income REIT has, in common with other trusts investing in property assets, posted negative share price returns over the past three and five years, with losses of -24.2% and -3.1%.  

Property is an economically sensitive asset class, so is responsive to changes in interest rates. Accordingly, the value of real estate has fallen markedly across many parts of the market over the past few years.

But amid negativity in the sector, there is opportunity. Just as markets can be quick to discount property, the prospect of interest rate cuts can mean the asset class reprices quickly. It appears that some investors are looking to take advantage of the potential change in fortunes as well as Supermarket Income REIT’s sizeable discount, which stands at -16.8%.

• Will interest rate cuts help tide turn for property investing?
• Why these real estate funds look attractive

Second-ranked Scottish Mortgage 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 25.6%, but losses of -40.5% over three years are sizeable. This is due to its investment style suffering amid interest rate rises.

In third place is Greencoat UK Wind (LSE:UKW). 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 and its dividend yield stands at 7.2%.

Investors buying today are seeking to take advantage of its discount, currently -11.6%. Trading on a discount is something the trust shares with many peers in its sector. This area of the market fell out of favour amid rising interest rates, which caused bond yields to move higher. As a result, income seekers have more options and can take less risk, as the safest types of bonds - UK and US government bonds - offer yields of about 4% compared to virtually nothing when rates were at rock-bottom levels. 

But as interest rates start to fall, with fund manager abrdn expecting interest rates in the UK and US to settle between 2% and 3% by the end of 2026, the tide could start to turn for this sector as the gap between its yields and what investors can earn on cash becomes bigger.

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Swapping fourth and fifth places this month are Alliance Trust (LSE:ATST) and City of London (LSE:CTY).

Alliance Trust, a multi-manager trust that outsources stock picking to a selection of fund managers, is set to join forces with fellow multi-manager strategy Witan. The merger, which will lead to a new name of Alliance Witan, is set to swell assets to around £5 billion, which is expected to be of sufficient size for the trust to enter the FTSE 100 index.

City of London, which has been managed by Job Curtis since 1991, is a favourite with income-seeking investors. Curtis adopts a conservative approach by focusing on companies with good cash generation. City has raised its dividend for 58 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's 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.

• Watch our video: why City of London has boosted banks to a 20-year high
• Watch our video: why City of London sold Microsoft, and a sector to watch 

Of the remaining three trusts that kept their places in the top 10, JPMorgan Global Growth & Income Ord (LSE:JGGI) is in sixth place, F&C Investment Trust (LSE:FCIT) in eighth, while Allianz Technology Trust (LSE:ATT) is in ninth.

JP Morgan Global Growth & Income 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. 

F&C Investment Trust, the UK’s oldest investment trust, is another multi-manager approach. It 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 overseen by Paul Niven, who decides on the asset allocation and gearing level.

Tech trust Allianz Technology holds six of the “Magnificent Seven” US technology stocks in its top 10 positions, with Tesla Inc (NASDAQ:TSLA) the exception. As well as AI, cybersecurity is another key investment sector.

Interestingly, its tech trust rival Polar Capital Technology (LSE:PCT) slipped out of the top 10. Its performance has been slightly ahead of Allianz Technology over one and three years, but it is behind by six percentage points over five years, up 113.8% vs 119.6%.

The other exit is Pershing Square Holdings (LSE:PSH), managed by star investor Bill Ackman, who oversees a concentrated portfolio of US-listed stocks.

Top 10 most-popular investment trusts in September 2024 

Source: FE Analytics. Performance data to 30 September 2024. Rankings are based on the number of “buys” during September 2024.