What investment trusts did investors buy in June?

US shares continued to lead world markets higher in June, amid persistent optimism about the future for AI. Nvidia briefly overtook Microsoft to become the world’s largest listed company. Encouraging signs that US inflation continues to slow, albeit at a somewhat leisurely pace, provided further reason for markets to stay on the front foot.

France was Europe’s outlier, with shares falling back after the calling of a snap general election. A strong showing by the far right Rassemblement National drove concerns about fiscal sustainability within the eurozone, although a political impasse has since become the chief concern.   

Closer to home, the FTSE 100 Index ended June little changed despite an impending general election. News that inflation had fallen to the Bank of England’s 2.0% target in May bolstered shares but caused the pound to slip modestly against the dollar¹. 

June saw a landmark event in the shape of a £5 billion merger between Alliance Trust and Witan Investment Trust. The combined portfolio will be run in line with Alliance Trust’s existing arrangements, under which the choice of fund managers is delegated to WTW (Willis Towers Watson). Completion of the deal is expected by late September or early October.

Investment trusts with a growth remit dominated the sales tables once again last month. One change compared with May was an increase in the popularity of UK focused trusts reflecting, perhaps, expectations of a more stable domestic political outlook.

Fidelity Special Values returned to the top spot from eighth place in May. Investment Week’s Investment Company of the Year and Citywire’s Best UK All Companies Trust is a contrarian, value investor that searches out underappreciated companies mostly in the UK.

This trust offers an exposure to companies often not covered by other popular UK funds. It currently has a broad based portfolio composed of 119 holdings. Notable too is its 23% exposure to financials – banks and life insurers – that the manager characterises as “a differentiated exposure”.

Current large holdings include the Irish sales and marketing group DCC, Imperial Brands and AIB Group (Allied Irish Banks). The trust currently trades at a 7.7% discount to its asset value, little changed on a month ago.

Scottish Mortgage advanced one place in June to second. The UK’s largest investment trust recorded a solid first half performance following a number of fits and starts in 2023 and investors will be hoping for further gains when interest rate cuts finally arrive. In the meantime, the second quarter results season for tech companies and the trust’s ongoing £1 billion share buyback may provide some impetus.

Nvidia remains the trust’s top holding, while Moderna overtook ASML as the second largest holding in May. The trust’s discount has widened a little over the past month, to 9.9% compared with 8.3% a month ago².    

Polar Capital Technology Trust, the second tech-focused trust on this list, advanced from fifth to third. The trust reports it is holding companies understood to be well-positioned for the build-out of parallel computing architecture and the rebuilding of global data centres. Conversely, it has reduced exposure to software businesses. The trust’s largest holdings are: Nvidia, Microsoft and Alphabet. The trust currently trades at a discount of around 9.4%³.

F&C Investment Trust rose two places to fourth in June. This global trust is interesting in the context of its rivals in that it is currently invested in more than 400 companies spread over 35 countries. It also owns a relatively modest exposure to America’s mega-cap tech companies. Microsoft is the largest holding at 3.2% of the portfolio; Nvidia is next at 2.6%⁴.

This trust aims to achieve dividend growth that beats inflation over the long term. It also aims to smooth out the highs and lows of stock markets, an ambition partly realised through 53 years of consistent dividend growth.

JP Morgan Global Growth & Income slipped a place to fifth. This trust aims to beat the MSCI All Countries World Index over the long term. It currently trades at a 1.4% premium to its asset value compared with a 2.5% discount a month ago and has a prospective dividend yield of around 3.4%⁵. Please note, this yield is not guaranteed.

Like many other global trusts, mega-cap technology companies dominate the top holdings, although there are understandably large weightings in income producers too, including Exxon Mobil and Nestlé.

City of London Investment Trust re-entered the best sellers list in sixth position after a brief absence in May. This trust is recognised for its relatively stable capital returns and a long history (57 years and counting) of continuous dividend growth.

While this trust invests in the UK, over 60% of the revenues of the companies it is invested in come from overseas. Therefore, it effectively offers an exposure to global corporate profits at a discount. The trust currently trades at a 2.0% discount to its net asset value and yields 4.8%⁶. Please note this yield is not guaranteed.

Allianz Technology Trust was the third technology focused portfolio to make the top 10 in June. This trust’s managers continue to report a high level of conviction in secular growth trends within technology, in the belief we are still early in the spending trend supporting the sector. Nvidia (now 11.5% of the portfolio) Microsoft and Meta are the top holdings. The trust currently trades at a discount of 8.3%, down from 12% in May⁷.

Fidelity European Trust ranked eighth in June compared with third in May, while remaining the top choice for a European exposure. This trust has a strong bias towards large businesses with resilience and pricing power and has the Dutch chip lithography specialist ASML, Novo Nordisk and Nestlé as its top three holdings.

The trust is reasonably concentrated – its top 10 holdings account for around 48% of the portfolio and there are just 46 holdings in total.  It currently trades at a discount of about 4% compared with 3.4% a month ago.

June was a challenging month for China’s stock markets and for Fidelity China Special Situations, which was in ninth position. China’s elongated post-pandemic recovery appears to have entered a slower phase characterised by modest consumer growth and the return of deflationary forces. China’s property market remains a drag on confidence and, ultimately, growth.

Notwithstanding this, in an interview with Fidelity’s Tom Stevenson in early May, the trust’s manager Dale Nicholls reported that clear winners are emerging and that some Chinese companies are delivering better shareholder returns in terms of buybacks and dividends. The trust currently trades at a discount of 9.4% compared with 10.5% a month previously.

Rounding out the table was Greencoat UK Wind, down a place from ninth in May. This trust provides investors with an opportunity to capitalise on the energy transition and could stand to benefit from the new UK government’s plans to invest more in renewables.

Labour’s quick decision since the election to lift the de facto ban on new onshore wind certainly points in that direction. The trust says that it supplied 1.5% of the UK’s electricity in 2023⁸.

Top 10 best-selling investment trusts on Fidelity’s Personal Investing platform in June 2024

1. Fidelity Special Values
2. Scottish Mortgage Investment Trust
3. Polar Capital Technology Trust
4. F&C Investment Trust
5. JPMorgan Global Growth and Income
6. City of London Investment Trust
7. Allianz Technology Trust
8. Fidelity European Trust
9. Fidelity China Special Situations
10. Greencoat UK Wind

Source: Fidelity Brokerage, 1-30 June 2024

Source:

¹ ONS 19.06.24
² Scottish Mortgage, 09.07.24
³ Polar Capital, 09.07.24
⁴ F&C, 31.05.24
⁵ JP Morgan, 05.06.24
⁶ Janus Henderson, 05.07.24
⁷ Allianz Global Investors, 31.05.24
⁸ Greencoat UK Wind, 29.02.24

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.