- Equity income trusts in demand
- City of London most bought
- Scottish Mortgage, Finsbury Growth & Income divide opinion
With conflict in the Middle East and Ukraine creating uncertainty, and investors grappling with cost-of-living pressures as falling inflation is expected to be a drawn-out process, dependable income trusts have proved popular on the AJ Bell platform over the past month.
At the same time, rising optimism over the potential for interest rate cuts in 2024 meant selective growth-oriented names caught a bid.
TOP BUYS
More than 11% of all investment trust purchases on the AJ Bell platform over the past month were for City of London (CTY), the Association of Investment Companies’ (AIC) ‘dividend hero’ steered by Job Curtis.
Invested in cash-generative FTSE 100 stalwarts such as Shell (SHEL), BP (BP.) and BAE Systems (BA.), City of London’s share price total returns have outperformed the AIC UK Equity Income sector over one and three years, up 2% and 25.9% respectively versus 1% and 18.4% for the sector.
Other dividend-seeking portfolios proving popular with AJ Bell customers last month included Merchants (MRCH).
Guided by seasoned investor Simon Gergel, Merchants has outperformed the UK Equity Income sector over three, five and 10 years and represented 3.6% of all purchases on the platform, while the Mike Kerley and Sat Duhra-managed Henderson Far East Income (HFEL) was in demand with investors keen to diversify geographic sources of income.
AJ Bell customers appeared split on the prospects for Finsbury Growth & Income (FGT), a prominent name in both the top buys and sells table.
Although the trust has struggled of late, star manager and ‘buy and hold’ investor Nick Train says he keeps finding globally-significant and competitive UK companies that are valued at a discount to global peers.
GOING FOR GROWTH
With many investors believing global growth leadership could shift from the US towards Europe and emerging markets in 2024, JPMorgan Emerging Markets (JMG) was also in demand, speaking for almost 4% of purchases.
Elsewhere, the high-flying JPMorgan Global Growth & Income (JGGI), which targets capital growth and an attractive dividend yield, thereby providing investors with the best of both worlds, continued to attract buyers.
Analysis of the data shows that Scottish Mortgage (SMT) was the second most-bought trust, accounting for over 7% of all purchases.
However, Baillie Gifford’s flagship fund was also the most sold trust, speaking for almost 15% of sales over the month as investors fretted over recent underperformance and the trust’s allocation to hard-to-value private companies.
Scottish Mortgage’s Baillie Gifford stablemate Monks (MNKS) spoke for 2.7% of all sales, while capital preservation fund Ruffer (RICA) and global mid- and small-cap specialist Smithson (SSON) were also friendless, speaking for 2.5% of sales respectively.
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (James Crux) and the editor (Ian Conway) own shares in AJ Bell.
