The market’s new-found appetite for risk assets this month has lured investors back into popular growth investment trusts, such as Scottish Mortgage (SMT).
Data from investment platform AJ Bell YouInvest shows that the Baillie Gifford-run trust was the second most bought by investors across the platform during August.
The data also shows that contrarians have also been willing to back China, despite the huge uncertainty around its exciting technology sector as regulators sharpened their teeth this year. The heavily marked-down Fidelity China Special Situations (FCSS) was also among the most popular with investors.
RISK BACK ON AFTER WOBBLE
According to AJ Bell YouInvest customer trade volume data, the top buy on the platform was Scottish Investment Trust (SCIN), which has been recently unloved as it continues to search for a manager to replace the outgoing Alasdair McKinnon.
Scottish Mortgage has seen its share price wobble in July as China’s communist rulers cracked down on the country’s big tech companies. Four of the FTSE 100 trust’s top 10 holdings are Chinese companies, including electric car developer Nio and internet titan Tencent, until recently its biggest single stake.
Yet the stock has recovered recently amid a wider rally in risk assets, boosted by the FDA’s full approval of the Pfizer/BioNTech jab. That news boosted rival jab maker Moderna, Scottish Mortgage’s largest stake at 8.5% of the portfolio.
EMERGING MARKETS SELL-OFF
However, the Chinese authorities widening regulatory crackdown continues to worry many, hence Scottish Mortgage also featuring as the most sold trust this month. China’s clampdown has triggered significant losses for investors in emerging markets focused funds and investment trusts, including Fidelity China Special Situations, the second most sold investment trust on the platform over the past month.
Its shares have plunged from a one year peak of 498p to 342p, although contrarians appear to have spied an opportunity, since the trust was also the third most bought on the platform.
Other top buys this past month included global fund all-rounder F&C Investment Trust (FCIT) and the popular, Simon Barnard-managed Smithson (SSON).
Also in demand was HydrogenOne Capital Growth (HGEN), which listed in London in July after raising £107 million to invest in clean hydrogen projects. Investors are evidently excited about the opportunities surrounding hydrogen, long-touted as a potential mass clean fuel as it only emits water vapour.
DISCLAIMER: Financial services company AJ Bell owns Shares magazine. Steven Frazer, who edited this article, and author James Crux, own shares in AJ Bell.
