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The investment trusts that the professionals are more interested in during 2018

19 July 2018

We find out which investment trusts have been looked at more often by the professional investors using FE Analytics.

By Gary Jackson,

Editor, FE Trustnet

The global and Asian investment trust sectors are being more heavily researched in 2018, analysis of professional investors’ behaviour shows, while the popular Scottish Mortgage trust has gained even more attention this year.

The opening half of 2018 might have thrown up a few challenges for investors as volatility returned and US moved the world towards a trade war but investor sentiment has held up and many stock markets posted gains over the six-month period.

Against this backdrop, we used the FE Analytics Market Intel Tool to review which investment trusts the financial advisers, discretionary fund managers and other professional investors on FE Analytics had been researching in 2018.

The below chart shows the percentage changes in the overall share of factsheet views going into the Association of Investment Companies sectors in the first half of 2018, compared with the previous three-year period.

Change in factsheet share between H1 2018 and previous 3yrs

 

Source: FE Analytics Market Intel Tool

As can be seen, the biggest winner has been the IT Global sector, where the share of factsheet views has increased 1.15 percentage points (moving from 14.06 per of all investment trust research in 2015, 2016 and 2017 to 15.21 per cent of the views in 2018’s first six months).

The uncertainty around the UK, prompted by the country’s decision to leave the European Union and political uncertainty, has seen investors increasingly look for international opportunities, with global trusts being some of the main beneficiaries of this.

This desire to look overseas is backed up by the fact that Japan, Country Specialists: Asia Pacific and Japanese Smaller Companies are the next three sectors with the biggest gains in research share.

The next four sectors to see an uptick in factsheet views are a relatively mixed bag but all reflect the fact that investors have their eyes firmly set outside of the UK for opportunities: European Smaller Companies, Tech, Media & Telecomm, Flexible Investment and North America.


Turning our attention to the individual investment trusts that have seen the biggest increase in their share of factsheet views in 2018 compared with the three previous years, we see that Scottish Mortgage Investment Trust has cemented its position at the very top of the table.

Indeed, the £7.8bn Scottish Mortgage Investment Trust was already the most heavily researched member of the Association of Investment Companies universe over the three years to the end of 2017, with a 3.59 per cent share of all investment trust factsheet views on FE Analytics.

In the first half of 2018, the five FE Crown-rated trust grew this to 4.36 per cent of the research platform’s investment trust factsheet views. This means Scottish Mortgage alone receives more research from professional investors than every whole sector apart from the IT Global, UK Equity Income, Flexible Investment, UK All Companies, Asia Pacific - Excluding Japan and Infrastructure.

 

Source: FE Analytics Market Intel Tool

Scottish Mortgage’s research growth was much higher than any other trusts. The second best performer was Pacific Horizon IT, but its share of factsheet views was only up 40 basis points for the six-month period.

Foreign & Colonial Investment Trust also appears on the list after a rise of 36 basis points to mean it has accounted for 1.61 per cent of trust factsheet views over 2018 so far. The trust is the oldest in existence and celebrates its 150th anniversary this year.

Only a handful of UK equity trusts are among those with the most adviser interest, including Neil Woodford’s Patient Capital Trust. However, this comes as the trust is going through a period of significant underperformance.

The other UK trusts of interest – JP Morgan Global Growth & IncomeJP Morgan Claverhouse and BlackRock Throgmorton – have much stronger track records are currently in their respective sector’s top quartile for the first six months of 2018 as well as over one, three and five years.


As the chart at the top of the article showed, the Association of Investment Companies peer groups that have been hit with the biggest falls in the share of factsheet views are those that concentrate on UK equities. This reflects flow trends seen in the Investment Association universe, where investors have been dumped UK funds for some time.

The research share of the IT UK Equity Income sector has fallen from 11.45 per cent for the three years to the end of 2017 to 10.1 per cent in 2018’s opening half. However, it must be kept in mind that the peer group remains the second most popular in the trust universe.

IT UK Equity & Bond Income has seen the next largest fall in its share of overall factsheet views, followed by Europe, UK All Companies, Hedge Funds and Global Emerging Markets.

 

Source: FE Analytics Market Intel Tool

The above table shows this exercise repeated for the individual investment trusts with the largest falls in their share of research over 2018.

The fund at the top of the list – Aberdeen Asian Income – is from one of the sectors that has seen from a decrease in overall research. However, it was the peer group’s biggest faller over the six months in question and resides in the IT Asia Pacific Excluding Japan sector’s bottom quartile over one, three and five years.

As would be expected, plenty of UK trusts can be found on the list include the likes of Perpetual Income and GrowthCity of London and Standard Life UK Smaller Companies.

Infrastructure was also hit hard with GCP Infrastructure Investments and International Public Partnership seeing the second and third biggest falls in interest among professional investors, reflecting the deterioration in sentiment towards this part of the market.

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