Investment trusts pile into UK and US
The Association of Investment Companies (AIC) looks at how asset allocation has changed in the last 12 months, and which trusts have made the biggest regional moves.
The US has been the biggest regional winner in the investment trust universe over the past year, with many trusts increasing their exposure, sometimes very significantly in the case of the Global Growth sector. The US was the region most widely predicted to outperform in last year’s AIC fund manager poll.
France has been the biggest casualty, with a number of European investment companies reducing exposure significantly. But despite the doom and gloom around the UK economy, many investment companies have been increasing their exposure to domestic firms over the last year.
Big on Uncle Sam
Companies increasing their exposure to the US the most over the past year were: Martin Currie Global Portfolio (from 15 to 51 per cent), JP Morgan Overseas (from 20 to 32 per cent), Miton Worldwide Growth (from 13 to 20 per cent), Polar Capital Technology (from 64 to 70 per cent), and JP Morgan Elect Managed Growth (from 25 to 31 per cent).
Of course there were some exceptions that reduced their exposure, including the Scottish Mortgage trust (from 33 per cent a year ago to 28 per cent).
Retreat from France
France has been one of the biggest casualties in asset-allocation terms over the last year, with several investment companies taking money off the table. BlackRock Greater Europe decreased its weighting substantially, from 29 to 15 per cent, while The European Investment Trust went from 21 to 13 per cent.
Outside the European sectors, Polar Capital Global Healthcare Growth & Income was another AIC member reducing exposure to France, from 8 per cent a year ago to 3 per cent.
However JP Morgan European Smaller Companies bucked the trend, increasing its exposure from 8 to 15 per cent during this time.
Several investment companies have been steadily increasing their exposure to the UK. Among the European investment companies, JP Morgan European Income raised its weighting from 31 per cent a year ago to 44 per cent at the end of April.
Two commodities and natural resources investment companies have increased their exposure, namely BlackRock World Mining – by 10 per cent to 44 per cent – and City Natural Resources High Yield, from 11 per cent a year ago to 16 per cent.
Looking at the Global Growth sector, the Alliance Trust increased its exposure to the UK by some 11 per cent, from 34 per cent a year ago to 45 per cent. The Cayenne Trust upped its stake in the UK by 10 per cent, while the Monks Investment Trust and Mid Wynd International increased their exposure by 8 per cent.
Among the companies that decreased their exposure to the UK was the Personal Assets Trust, down from 26 per cent a year ago to 19 per cent at the end of April.
Commenting on the study, Annabel Brodie-Smith, communications director at the AIC, said: "Whilst it’s useful to look at asset allocation changes, it’s worth remembering that they do not tell the whole story."
"For example an investment company often reduces or increases exposure to a certain country due to individual company fundamentals, not geographical fundamentals, and countries that have struggled may well have strongly performing companies."
"The AIC produces a wide range of data on country and sector allocation, top holdings, performance, and more, and it’s important that investors do not look at any one piece of information in isolation."