Retail investors pile into beaten-up China trusts and airlines

Beaten-up China trusts and airline shares were among the top-sellers on Interactive Investor in July, but fund buyers stuck to tried-and-trusted growth managers.

Retail investors piled back into beaten-up airline stocks and China-focused investment trusts in July, while fund buyers remained firmly in the growth camp.

The aggressive selloff in Chinese technology companies after a series of regulatory clampdowns on the sector tempted bargain-hunters back into the investment trust market.

The Fidelity China Special Situations (FCSS ) trust, managed by Dale Nicholls, and the JPMorgan China Growth & Income (JCGI ) trust stormed back into Interactive Investor’s top-10-selling closed-end funds in July. JCGI was hit particularly hard last week and its shares entered the ‘cheap’ list of our ‘Trust Watch’, closing Friday on a 5% discount to their asset value.

No China trusts made the list in June by way of comparison. But with Tencent now down about 40% and Alibaba off 15% since the turn of the year, investors believe value is now emerging in the country, which was a top performer last year.

Top-selling trusts on Interactive in July

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Position Investment trust
1 Scottish Mortgage
2 Vietnam Enterprise
3 Polar Capital Technology
4 City of London
5 Monks
6 Smithson
7 Fidelity China Special Situations
8 JPMorgan China Growth & Income
9 Edinburgh Worldwide
10 Capital Gearing
Source: Interactive Investor

Keith Bowman, head of funds research at Interactive Investor, said: ‘It has been a white-knuckle ride for Chinese stocks, following China’s communist government crackdown on the nation’s tech giants. The short-term volatility creates buying opportunities for the long term – and it is clear that a number of our customers subscribe to this school of thought.

‘The long-term case for investing in China remains. The emerging middle class that powered economic growth in China is tipped to help the country out of the coronavirus malaise and fuel its transformation from an export-driven economy to one more focused on domestic consumption. The growth potential that this shift offers is considerable – but along the way, it can be very painful.’

Top-selling equities on Interactive Investor in July

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Position Equity
1 Rolls-Royce
2 Lloyds
3 International Consol. Airlines Grp
4 BP
5 Argo Blockchain
6 EasyJet
7 Vodafone
8 Cineworld
9 Wise
10 Boohoo
Source: Interactive Investor

Value was also the order of the day closer to home, with travel-related stocks dominating the list of top-selling equities. Aircraft engine manufacturer Rolls-Royce (RR) was the bought name and British Airways owner International Consolidated Airlines (IAG) and EasyJet (EZJ) both made the top five.

Dividend giants were also in demand, with Lloyds (LLOY) freshly back on the divi register, along with Vodafone (VOD) and BP (BP), which raised its payout today.   

Top-selling equity funds on Interactive Investor in July

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Position Fund
1 Fundsmith Equity
2 Baillie Gifford American
3 Vanguard LifeStrategy 80% Equity
4 Baillie Gifford Positive Change
5 Vanguard LifeStrategy 60% Equity
6 L&G Global Technology Index
7 Vanguard LifeStrategy 100% Equity
8 Baillie Gifford Managed
9 Vanguard US Equity Index
10 LF Blue Whale Growth
Source: Interactive Investor

However, many fund buyers were taking a more balanced approach, with Vanguard’s multi-asset LifeStrategy portfolios and the Baillie Gifford Managed fund proving popular.

If equity investors were leaning towards value, fund pickers very much favoured growth, with Terry Smith-run Fundsmith Equity , Baillie Gifford American and Blue Whale Growth , managed by Stephen Yiu, leading the charts.

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