What investment trusts did investors buy in August?

WORLD stock markets looked as if they were giving up the ghost for much of August. In a month often at the mercy of thin holiday trading, shares fell back amid a cocktail of worries about interest rates and China’s slowing economy.  

The downdraught rapidly reversed in late August. A combination of better-than-expected results from leading companies, notably NVIDIA, and meaningful economic stimulus measures from the Chinese government were behind the late rally. For all that though, stock markets were broadly unchanged on the month.  

Despite a volatile month’s trading, the top two investment trusts bought by investors on the Fidelity Personal Investing platform were unchanged compared to July. Scottish Mortgage topped the charts once again, as investors continued to back an anticipated revival in the trust’s fortunes.  

On the face of it, August should have been a positive month. Artificial Intelligence (AI) fever returned with a vengeance after blowout results from NVIDIA, boosting the trust’s large holdings in the chipmakers ASML Holding and NVIDIA itself, as well as leading AI beneficiaries like Amazon and Snowflake. 

Against that, the absence of a host of other mega-tech companies in the portfolio, including Apple and Microsoft, was probably seen as a negative. Holdings in Chinese companies like NIO and Tencent may well have been viewed from a similar perspective. 

This showed in the trust’s discount to net asset value, which remains stubbornly high at 20.5%. That’s slightly worse even than the discount of around 19.5% of mid August, and significantly weaker than the 16% discount at the start of June¹.  

That, in itself, may be spurring investors to add to their holdings. For others, the recent, relative intractability of the trust in the face of positive company news may be proving a deterrent.  

The City of London Investment Trust in second place could hardly be more different. Trading at a small premium of 1.3%, this trust aims for long-term income and capital growth from a portfolio of predominantly UK shares.  

The trust is approaching its 57^th year of unbroken dividend growth, and its present-day yield of around 5.3% remains attractive, especially with UK inflation now falling and forecast to fall further². Please note, this yield is not guaranteed.  

JP Morgan Global Growth & Income was a new entrant to the top five in August. Belying, perhaps, its total return remit, this is another trust with a substantial foothold in the tech sector. Four of the trust’s top five holdings – Microsoft, Amazon, Taiwan Semiconductor and NVIDIA – currently make up around 18% of the portfolio.  

The trust aims to beat the MSCI All Countries World Index over the long term, which it has succeeded in doing since stock markets bottomed in 2020. A prospective dividend yield of around 3.9% is a further attraction³. Please note, this yield is not guaranteed.

Meanwhile, Greencoat UK Wind remained the most popular way of capitalising on the global energy transition. The eighth largest constituent of the FTSE 250 Index rose a place to fourth on this list compared to fifth in July. Its exposure to inflation-linked revenues and high power prices at a time of elevated price pressures remain firm attractions.  

Interim results released at the end of July confirmed solid progress, with a difficult fundraising environment for the wind industry generally further enhancing the available investment opportunities⁴.  

Another new entry was the world’s oldest trust – F&C Investment Trust. Like City of London, this trust has consistently grown its dividends over the long term – 52 years in this case. However, this is a truly worldwide portfolio currently investing in more than 350 companies globally. The trust aims to grow its dividend faster than inflation over the long term and to smooth out the highs and lows of stock markets⁵. 

The trusts dropping out of the top five in August were Fidelity China Special Situations and investors’ top pick in Europe - Fidelity European Trust. You can hear about what the manager of the former thinks about China’s prospects in this latest interview with us.

Top 5 best-selling investment trusts on Fidelity’s Personal Investing platform in August 2023

1. Scottish Mortgage Investment Trust 
2. City of London Investment Trust 
3. JPMorgan Global Growth and Income PLC  
4. Greencoat UK Wind 
5. F&C Investment Trust

Source: Fidelity Brokerage, 1-29 August 2023 

¹ Scottish Mortgage, 30.08.23 

² Janus Henderson, 25.08.23 

³ JP Morgan, 29.08.23

⁴ Greencoat UK Wind, 27.07.23

⁵ F&C, 31.07.23

Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in these investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.