Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.

INVESTMENT TRUSTS aimed at delivering outright growth or a combination of income and growth topped the sales charts at Fidelity Personal Investing last month, suggesting investors continue to eye a range of ways to navigate tricky markets.

Scottish Mortgage was the month’s big winner, amid signs that the latest round of positivity in the technology sector is finally starting to rub off on this tech-heavy trust.

Having been firmly in the doldrums since late January, Scottish Mortgage shares embarked on a strong recovery in May, which only accelerated as the month progressed.

That said, the trust continues to trade at a sizeable discount to net asset value of around 16%, suggesting that sentiment remains compromised or there is further room for this recovery to continue, depending on your point of view1.

Still with large holdings in proven world leaders in their fields such as the Dutch chipmaker ASML, Moderna and Tesla – these three companies alone accounting for nearly a quarter of the portfolio – this trust’s near term fortunes remain inextricably interwoven with how the growth stock narrative unfolds this summer.

By contrast, positivity about Europe faded a little in May, overtaken by new doubts about the sustainability of growth in China – a leading destination for European premium and luxury goods – and the world generally.

However, this didn’t prevent Fidelity European Trust PLC from taking second place among the most bought investment trusts last month. Strong returns from Europe’s leading bourses in 2023 have helped shine a light on some of the region’s world leading companies, many of which trade at useful discounts to their American peers.    

For its part, the £1.4 billion, Europe-focused trust continues to pursue and invest in large businesses differentiated by virtue of their resilience and pricing power. Among the trust’s largest holdings currently are companies with strong retail brands, including Nestlé, LVMH and L’Oreal, and the global healthcare providers Roche and Novo Nordisk.

An impressive performance in 2022 has left Ruffer Investment Company on a firm footing this year. The trust managed to sidestep the worst ravages of last year by combining a low exposure to shares with large holdings in short dated bonds and some clever strategies in the derivatives markets to help offset some of the effects of rising inflation and interest rates.

On the evidence of its third place on this list last month, plenty of investors have been keeping the faith, even as conditions in stock markets have improved. The trust remains positioned for a more disinflationary environment than we see today. Its largest equity holding at the end of March was a meagre 0.9% weighting in Shell, while short dated bonds accounted for 28.9% of the portfolio2

The City of London Investment Trust is the senior fund in this company, now with an unbroken track record of growing its dividends over the past 56 years. That, together with an attractive present-day yield of around 5%, is, no doubt, part of the reason the trust currently trades at around a 2% premium to its net asset value3. Please note, the trust’s yield is not guaranteed.

Despite its total return remit, JP Morgan Global Growth and Income, in fifth place last month, is another trust with a strong foothold in the tech sector – Microsoft and Amazon accounted for almost 12% of the portfolio at the end of April.

The trust aims to beat the MSCI All Countries World Index over the long term – a comparatively tall order – but has a good track record of meeting or exceeding its ambitions since world markets bottomed in 2020. A competitive, prospective dividend yield of around 3.8% – which is not guaranteed – remains a further attraction4.

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

  1. Scottish Mortgage
  2. Fidelity European Trust PLC
  3. Ruffer Investment Company
  4. City of London Investment Trust
  5. JP Morgan Global Growth and Income

Source: Fidelity Brokerage, 1-31 May 2023

Other sources:

Scottish Mortgage, 05.06.23
Ruffer Investment Company, 28.04.23
3 Janus Henderson, 02.06.23
JP Morgan, 30.04.23

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. 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. There is a risk that the issuers of bonds may not be able to repay the money they have borrowed or make interest payments. When interest rates rise, bonds may fall in value. Rising interest rates may cause the value of your investment to fall. 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.

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