What investment trusts did investors buy in October?

Budget concerns and trepidation ahead of the US presidential election weighed on investor sentiment in October. Key economic reports from the US pointed to a resilient consumer, forcing markets to scale back their expectations for interest rate cuts. Leading tech shares were volatile, as markets looked past strong quarterly results and fretted about the near-term costs of AI.

Labour’s Budget received a lukewarm response at best from both shares and gilts, as investors shied away from the prospect of a substantial increase in government borrowing coupled with higher taxes. At the margin, the Budget appears likely to slow the pace of future interest rate cuts.

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China’s stock market continued to rise strongly at the start of the month following announcements of further measures to boost shares and the economy. The market quickly beat a retreat, however, amid fears the measures fell short of addressing China’s longer term economic challenges.

Trusts focused on technology and income producing assets stayed popular in October. In different ways, both are theoretical beneficiaries of lower interest rates. New to the top 10 was RIT Capital Partners, formerly Rothschild Investment Trust, a global portfolio of both quoted and private investments.

Fidelity European Trust was October’s best seller, having vacated the top 10 in August. Europe remains attractively valued, particularly in relation to the US, despite being home to a preponderance of world leading companies. Europe ex UK companies trade on around 14 times forward earnings compared with 19 times for US companies¹. 

Fidelity European Trust targets 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 just under half of a 45 stock portfolio. It currently trades at a discount of about 8.5%. 

Fidelity China Special Situations stayed in second place, as further parts of a significant package of government measures designed to boost China’s economy and its stock market got rolled out. The most recent data suggests Beijing’s measures are helping the economy to turn a corner, at least, in the short term. Manufacturing activity, for example, increased for the first time in six months in October².

Fidelity China Special Situations, which is focused on the beneficiaries of longer term changes in China’s economy, currently trades at about a 13% discount to its asset value.

In a month dominated by Labour’s first Budget, Fidelity Special Values returned in third place. This trust is a contrarian investor that seeks to invest in underappreciated companies mostly in the UK. As such, it offers an exposure to businesses not often covered by other popular UK funds.

This is a broad based portfolio currently comprising 118 holdings. Its largest (23%) exposure is to financials, currently led by holdings in NatWest Group, Aviva, Standard Chartered and AIB Group (Allied Irish Banks). Imperial Brands has recently become the largest holding. The trust currently trades at an 8.6% discount to its asset value, roughly comparable with a month ago.

JP Morgan Global Growth & Income rose a place to fourth. This trust has performed well versus its MSCI All Countries World Index benchmark ever since the pandemic. The trust’s prospective dividend yield was 4.1% as at the end of September. Please note, this yield is not guaranteed.

• Read more on JPMorgan Global Growth & Income

Mega-cap technology companies – which traded broadly sideways in October ahead of quarterly results announcements and the US election – still account for a large share of the top holdings. This is despite its style-agnostic approach. Large, non-tech holdings now include: the French luxury goods maker LVMH, UnitedHealth and the US electricity generator Southern Company.

The trust currently trades at a 1.6% premium to asset value, showing that a good capital performance coupled with an attractive yield come at a price. This is, however, down a little on the 2.5% premium the trust was showing last month³.  

September’s best seller and the largest trust of them all, Scottish Mortgage slipped to fifth in October. The trust’s top holdings saw some significant changes in September, with the Argentine e-commerce giant Mercadolibre, Amazon and SpaceX displacing ASML, Nvidia and Moderna from the top of the leader board. Tesla and the Chinese food delivery, shopping and travel app operator Meituan have since climbed the rankings to fourth and sixth respectively.

In October, the trust reported that its allocation to private companies had fallen to 23%, following the stock market flotation of Tempus AI. Scottish Mortgage currently trades at about an 11% discount to its asset value, little changed from last month⁴.

City of London Investment Trust, in sixth, was the second UK focused trust on this list. Over the longer term this trust is recognised for its conservative investment approach and for its 58 years of continuous dividend growth. This trust invests mainly in large UK companies, with its biggest holdings being Unilever, HSBC and Relx. BAE Systems has now slipped to fourth. 

The trust currently trades at a 0.8% discount to its asset value, little changed from a month previously, and yields around 4.9%⁵. Please note this yield is not guaranteed. 

• Read more on City of London Investment Trust

New entrant RIT Capital Partners took seventh place.  This trust aims for a better risk adjusted return than the wider stock market through a flexible strategy of investing in a mix of asset classes and geographies. Its distinctive approach includes allocations to private investments and “uncorrelated strategies”, which accounted for 32% and 24% of assets as at the end of September. The latter includes investments in government bonds, credit, absolute return strategies and real assets, including gold⁶.

Eighth-placed Greencoat UK Wind experienced a challenging October, as government bond yields rose and amid concerns that lower-than-average wind speeds over recent weeks will have dented output. That said, Greencoat UK Wind, which aims to grow its dividend by at least as much as growth in the Retail Prices Index each year, now yields around 7.7% based on its current quarterly dividend of 2.5p. Please note this yield is not guaranteed.  The trust completed the £725 million refinancing of its debt facilities in October and reported an NAV of 158.6p as at the end of September⁷.  

F&C Investment Trust, stayed in ninth. This trust draws on a multi-manager approach for its investment portfolio, which now extends to more than 400 companies. Wide diversification is aimed at combating the effects of volatile market conditions.

Nvidia, Microsoft and Alphabet are the three largest holdings currently but their weightings are relatively modest – the largest accounts for 3.6% of the portfolio.  The trust has consistently grown its dividend for 53 years and aims to increase its dividend faster than inflation over the long term⁸.

The only pure technology portfolio to stay in the top 10 in October was Polar Capital Technology Trust. During October, the trust’s managers reaffirmed their positive view of AI, saying “we remain extremely positive on the outlook for AI and believe 2025 will see others increasingly share this view as AI becomes more pervasive”.

This positivity is borne out by the trust’s largest holdings, which remained Nvidia, Microsoft and Apple at the end of September. The trust currently trades at a discount of around 11%, up slightly from a month ago⁹.

Dropping out of the top 10 in October were Allianz Technology Trust, Alliance Trust and BlackRock World Mining Trust.

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

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

Source: Fidelity Brokerage, 1-31 October 2024

¹ MSCI, 31.10.24
² Reuters, 31.10.24
³ JP Morgan, 07.11.24
⁴ Scottish Mortgage, 08.11.24
⁵ Janus Henderson, 08.11.24
⁶ RIT Capital Partners, 30.09.24
⁷ Greencoat UK Wind, 24.10.24
⁸ F&C, 07.10.24
⁹ Polar Capital, 07.10.24

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.