What investment trusts did investors buy in 2024?

Mega-cap technology companies may have dominated the headlines and the progress of world stock indices in 2024, but investment trusts with strong value credentials figured prominently among the top-sellers at Fidelity Personal Investing. While two, pure technology trusts made it into the top-10, trusts investing in the UK, European and Chinese stock markets accounted for a large share of the year’s purchases.

Scottish Mortgage won out as the best selling investment trust at Fidelity in 2024. Those investors that maintained their faith in the trust after a disappointing 2023 were ultimately rewarded as returns picked up, especially in the second half of the year.

A £1 billion share buyback and a decline in the trust’s allocation to private companies were among the factors lifting sentiment over the year. Scottish Mortgage now trades at a discount of around 12% to its asset value, substantially below the peak of more than 20% seen in mid-2023¹.

The trust has seen some significant changes over recent months, including a sizeable reduction in its long-held position in Nvidia. The Argentine e-commerce giant Mercadolibre, Amazon and SpaceX are now the top-three holdings, with Nvidia, the Chinese food delivery, shopping and travel app operator Meituan and Tesla the next three.

JP Morgan Global Growth & Income took second place. This trust had another positive year, benefitting from the strong progress of its holdings in mega-cap technology names and despite having a more balanced mandate than many of its global peers.

This style-agnostic, “best ideas” portfolio has performed well since markets bottomed in 2020 and its popularity means that it currently trades at a 1.1% premium to its asset value. The trust’s prospective dividend yield was 3.9% as at the end of November². Please note, this yield is not guaranteed.

Fidelity China Special Situations was the best selling trust in August and third best seller of the year. China’s stock markets rocketed in September, as hopes the authorities would act soon to boost the ailing economy were, in part, realised. Shares have followed a volatile track since then amid uncertainty about how proposed stimulus measures might be deployed and whether they might be extended.

Fidelity China Special Situations, which is focused on the beneficiaries of longer term change in China’s economy – including new domestic consumer spending power and the expansion of e-commerce and healthcare – broadly followed a similar path. The trust currently trades at a 13% discount to its asset value.

October’s best seller, Fidelity European Trust took fourth place. Like Fidelity China Special Situations, this trust saw interest from value-seeking investors during a year dominated by US businesses trading on high valuations. While it’s become normal for European stocks to trade at a discount, the value gap is now stark. Europe ex UK companies trade on around 14 times forward earnings compared with 22 times for US companies³.

The Fidelity European Trust continues to target large European businesses with resilience and pricing power. The Wegovy weight loss drug producer Novo Nordisk, chip lithography specialist ASML and Nestlé are the current top three holdings. The trust is reasonably concentrated, with its top 10 holdings accounting for around 48% of a 46 stock portfolio. It currently trades at a discount of about 8.8%.

F&C Investment Trust, in fifth, was in the running for a top-10 place for much of the year. This £6 billion trust draws on a multi-manager approach for its global investment portfolio, which now extends to more than 400 companies. This broad diversification is aimed at combating the unwanted shorter term effects of volatile market conditions.

Nvidia, Microsoft and Alphabet are the three largest holdings currently but their weightings are relatively modest. The largest, Nvidia, accounts for 4.0% of the portfolio, while Microsoft in second place accounts for a relatively meagre 2.7%. The trust has consistently grown its dividend for 53 years and aims to increase its dividend faster than inflation over the long term⁴.

City of London Investment Trust maintained a firm grip on the best sellers table for much of 2024 and ended the year in sixth position. This trust is valued for its conservative investment approach and for delivering 58 years of continuous dividend growth.

This 81 stock portfolio consists mainly of investments in large UK companies. HSBC overtook Unilever to become the top holding in October. Relx and the trust’s former largest holding BAE Systems are now in third and fourth. City of London traded close to its asset value most of the year and currently yields around 4.8%⁵. Please note this yield is not guaranteed.

Pure technology trusts were in favour as the AI boom gathered pace. Polar Capital Technology Trust took the honours as the most popular of all. This trust is run on a “benchmark aware” basis by one of the largest technology investment teams in Europe and currently has just over 90% of its portfolio invested in companies valued at more than $10 billion.

During October, the trust’s managers noted that “technology giants continue to scale their AI infrastructure investments, suggesting confidence in its long-term potential as adoption maintains its growth”. In contrast to Scottish Mortgage, the trust’s weighting in Nvidia (11.9%) has stayed high.  The trust currently trades at a discount of around 12%⁶.

Allianz Technology Trust, in eighth place, values the close proximity of its investment team to Silicon Valley and currently holds even more of its portfolio in companies valued at more than $10 billion (around 97%). Recent additions include Spotify, Netflix and Germany’s business software vendor SAP. The trust currently trades at a discount of around 11%, similar to Polar Capital Technology Trust, above⁷.

In ninth place, Fidelity Special Values drew support for its contrarian, value-based approach, which means it often provides an exposure to UK businesses not covered by other popular trusts. Despite having a focus on companies with resilient earnings, superior returns on capital and relatively low levels of debt, the trust’s investments are trading at a discount in relation to the UK stock market.

Currently consisting of 122 separate holdings, the trust’s largest exposure is to financials, led by holdings in Aviva, NatWest, AIB Group (Allied Irish Banks) and Standard Chartered. Some defensive stocks are also considered to be good value and Imperial Brands has recently become the largest holding. The trust currently trades at an 8.3% discount to its asset value.

Greencoat UK Wind rounded out the top-10. This trust turned out to be another value proposition for investors, offering a yield a bit over 7% for much of the year and higher than that at times. Sentiment towards the trust was hampered in the second half of the year by disappointing wind output levels as well as a slightly less benign outlook for interest rates and bond yields after Labour’s first Budget. As well as offering a high yield from day one, the trust aims to grow its dividend by at least as much as the rise in the Retail Prices Index each year. Please note, however, the trust’s yield is not guaranteed.

Source:

¹ Scottish Mortgage, 17.12.24
² JP Morgan, 17.12.24
³ MSCI, 30.11.24
⁴ F&C, 17.12.24
⁵ Janus Henderson, 17.12.24
⁶ Polar Capital, 17.12.24
⁷ Allianz Global Investors, 17.12.24

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

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

Source: Fidelity Brokerage, 1.1.24 to 10.12.24

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.