MoneyWeek

Top investment trusts ranked


Scottish Mortgage Trust, which is particularly exposed to the Mag7 through the likes of Nvidia, Amazon and Tesla, continued to be the most popular investment trust in May. But the allure of tech exposure by no means attracted all comers, with Polar Capital Technology and Allianz Technology both dropping out of the top 10.

Elsewhere, trusts focused on renewable energy infrastructure also received renewed interest from “investment trust bargain hunters”, Caldwell said. Two of the three new top 10 entrants – NextEnergy Solar Fund and Gore Street Energy Storage – benefitted from this trend (private equity and infrastructure-focused 3i Group was the other new top 10 entrant).

He added: “Since interest rates started rising in late 2021 investors have been shunning the renewable energy infrastructure sector. Those rate rises have caused a re-pricing of valuations, which has harmed share prices. At the same time that interest rates rise, so do bond yields.

“As a result, income seekers now have more options and can take less risk as the safest types of bonds, UK and US government bonds, now offer yields of around 4% compared to virtually nothing when interest rates were at rock-bottom levels. However, it appears that some investors are now attempting to buy low in the hope that a recovery will play out.”

Caldwell also said investment trust discounts have been “widening”. He added: “With big discounts and big yields on offer, those investors buying today could argue they are being paid to wait for a change in fortunes. In terms of potential tailwinds, interest cuts would in theory be a positive, as this would likely cause bond yields to fall.”

Here are the top 10 investment trusts for May:

Scottish Mortgage (SMT)
JP Morgan Global Growth & Income (JGGI)
Greencoat UK Wind (UKW)
Alliance Trust (ATST)
City of London (CTY)
NextEnergy Solar Fund (NESF)
BlackRock World Mining (BRWM)
3i Group (iii)
F&C Investment Trust (FCIT)
Gore Street Energy Storage Fund (GSF)