10 most popular trusts – February 2018

After a falling out of the top 10 table last month, Woodford Patient Capital (WPCT) has regained its place as one of the most popular funds to buy, ranking third according to data for the month of February from our sister website interactive investor.

The trust was a regular among the top 10 most-bought choices on interactive investor last year. However, in January it slipped out the rankings, amidst continuing negative coverage of Woodford and the various trusts and funds he manages.

Perhaps most attractive to investors right now is the trust’s deep discount of 13%, compared to its 12-month average discount of 6.2%. The trust claims that many of its investments, focusing on UK biotech and other unlisted technology companies, are set to reach critical milestones this year. A lot of investors buying now are likely hoping that this will lead to the current discount narrowing.

Neil Woodford interview: Biggest investment decisions explained

Recently, Woodford sat down with interactive investor, outlining why he believes his critics are wrong as well as why the UK economy is being underestimated right now.

Scottish Mortgage (SMT), predictably, took number one place again. The global equity focused investment trust has been our most-bought trust for almost one full year now.

Unusually for the solidly performing trust, it is currently on a slight discount of around 1.4%. On average over the past 12 months it has been on a premium of 1.1% – so now is a slightly cheaper time to buy.

Next, Baillie Gifford Shin Nippon (BGS) has continued its climb up the rankings to number two, while its sister trust, Baillie Gifford Japan IT (BGFD) has slipped slightly to ninth -although it still remains within the top 10.

Both trusts have seen a surge in popularity owning to growing interest in Japan from retail investors. The country is widely considered to be on the road of beneficial economic and corporate governance reform.

Even Shin Nippon’s relatively high premium has failed to keep investors away. While the trust’s premium has fallen from its high of 13%, it still trades at 10% above the value of its underlying assets. By contrast, its historical 12-month average is a 6% premium.

Shin Nippon produced a 53.8% share price return in the calendar year of 2017, while its three-year share price performance is 176.4%. Of course past performance is no guarantee of future returns – although among the top 10 most popular trusts Shin Nippon ranks highest for one-month returns, at 5.8%.

Other Asian-focused trusts have also stayed in the top 10. Fidelity China Special Situations (FCSS) fell by three places but still remains undeniably popular, coming in at seventh place. Its discount, 11.2%, is not far off its 12-month average.

Last month’s new entrant, VinaCapital Vietnam (VOF), has remained popular – albeit slipping down the ranking four places. Vietnam, a frontier market in the midst of economic reforms, is an increasingly popular place for investors – and VinaCapital is one of the easiest ways for retails investors to gain exposure.

Edinburgh Investment Trust (EDIN) is a new addition to the top 10 this month. Run by Mark Barnett, it is now on a 9% discount. This is much wider than its 6.5% average -potentially making it attractive to investors right now.

Its fellow UK equity income stalwart City of London (CTY) has also shot up the rankings, going from tenth place to fourth. It is currently on a 1.2% premium, just above its 1.1% average.

Templeton Emerging Markets (TEM) fell out of the rankings this month. Despite optimism over emerging markets and the trust’s strong performance over recent years, the departure of manager Carlos Hardenberg has likely instilled some reservations among potential buyers.

This article was originally published in our sister magazine Money Observer. Click here to subscribe.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation, and is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. 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.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company’s or index name highlighted in the article.