City of London was the most researched investment trust in 2022, according to data from the Association of Investment Companies (AIC), rising to overtake Scottish Mortgage, which dropped to second.
The £2bn UK equity income trust, managed by Job Curtis, had a strong year as the risk-averse nature of the portfolio was able to weather 2022’s inflation-driven market storm.
While most major markets were down, the FTSE All Share made a 0.3% return but the trust trounced that, up 9.4%. Its average IT UK Equity Income peer, meanwhile, could only muster a 4.3% loss.
A strong 12 months only builds on the long-term track record of the trust, which has beaten its average peer and the FTSE All Share index over 10 years.
Total return of trust vs sector and FTSE All Share index over 10yrs
Source: FE Analytics
City of London has the longest track record of consistently paying dividends, having increased its pay-out in each of the past 56 years, while Curtis is one of the most longstanding names in the industry, having overseen the portfolio since 1991.
Income was a key theme for the year with fellow UK dividend specialist Merchants trust climbing from the fifth most-viewed trust to the third.
The £822m trust, which is been a top-quartile performer in the sector over one, three, five and 10 years, has been managed by Simon Gergel since 2006 and has a yield of 4.7% – the same as the City of London.
Global income fund Murray International stayed as the fourth most-viewed trust, according to the AIC, joined in the top 10 by peers JPMorgan Global Growth & Income (up seven spots to sixth) and Scottish American (up six places to 10th). Regional dividend specialist Henderson Far East Income also made the top 10, up one place to ninth.
Annabel Brodie-Smith, communications director of the AIC, said: “With the cost-of-living crisis continuing to bite, it’s understandable that investment companies with long track records of dividend growth were most popular with investors last year.
“Investment companies have strong income benefits which can help them continue to pay dividends to investors even during tough times. However, it’s important to remember that dividends are never guaranteed.”
Source: Association of Investment Companies
At the other end of the spectrum, Scottish Mortgage was less popular as the trust plummeted in 2022 on the back of rising interest rates, which impacted the valuations on its speculative growth names.
The trust remains the top performer in its sector over five and 10 years, even despite almost halving (down 45.7%) in 2022.
Investors seemed to sour on the IT Global sector more generally with Bankers dropping from third to seventh and Alliance Trust leaving the top 10 altogether (14th overall), although F&C Investment Trust (up from sixth to fifth) bucked the trend.