Deutsche Numis: What were retail investors’ favourite trusts in 2024?
As the number of self-directed investors using platforms continues to rise, so does their significance on the registers of many investment companies.
Buying trends on big platforms such as Hargreaves Lansdown (HL) are an interesting indicator of recent retail demand in the sector.
To dig into that further, Deutsche Numis analyst Ash Nandi aggregated the monthly most-bought rankings across four popular trading platforms to provide an overview of 2024.
In broad strokes, large and long-established trusts with equity-oriented strategies dominated the most-bought lists. Interestingly, some alternative investment companies, in areas such as infrastructure, are also growing more popular.
Source: Numis
HL, AJ Bell, Fidelity and Interactive Investor – the four platforms considered – release data monthly. HL’s ranking is based on the net number of buys, while the other three platforms ignore the impact of sales and focus on the absolute number of buy deals from customers.
On a sector basis, 43.5% of appearances across the most-bought lists of 2024 were global trusts, 13.5% were UK equity-oriented funds, 11.7% were technology strategies, and 10.9% were renewable energy investment companies.
Asia Pacific (4.3%) and mining trusts (4.3%) also featured at a lower level.
In December alone, 50% of appearances were global, 12.5% were renewable, 10% were UK and 7.5% were tech trusts.
Global favourites
Scottish Mortgage (SMT ) and JPMorgan Global Growth & Income (JGGI ) featured in all four most-bought lists for every month of 2024.
JGGI is becoming a powerhouse in the sector and stands out for trading at a premium to net asset value – about 1% today – as most peers have slumped to discounts.
The trust exploited that to issue nearly £22m worth of shares in 2024, making for the highest secondary fundraising across the sector, according to Association of Investment Companies data.
The £3.1bn global equity income trust has been swelled by mergers with three other closed-end funds and an underlying portfolio gain of 116% over five years, well ahead of global markets, according to Deutsche Numis data.
The next most frequent appearances were City of London (CTY ) and Alliance Witan (ALW ), formerly Alliance Trust.
ALW’s prominence speaks to the successful merger last year of multi-manager funds Alliance and Witan – the largest-ever investment trust merger, creating a £5.2bn vehicle today. The move was the result of a strategic review by Witan’s board, triggered by the announcement of the retirement of the fund’s chief executive Andrew Bell.
Other popular plays
The strong run for the technology sector meant Polar Capital Technology (PCT ) and Allianz Technology (ATT ) were also popular in 2024. The expansion of the former saw it bag a spot in the FTSE 100 yesterday.
Despite a further renewables sector derating during the year, Greencoat UK Wind (UKW ), The Renewables Infrastructure Group (TRIG ) and NextEnergy Solar (NESF ) also made the 2024 most-bought list.
Beyond renewables, BlackRock World Mining (BRWM ), the £932m trust lead managed by Evy Hambro, also made the list. Last month the trust climbed back into the top 10s of Interactive Investor and HL after a brief absence.
Smithson sold
Only two of the four platforms release sales data. AJ Bell highlights the gross number of sell trades. As such, its list regularly features large, liquid funds that are frequently traded and sometimes on its most-bought list at the same time.
Since last March, HL has released monthly net sales data. Notably, Schroders Capital Global Innovation (INOV ), the ex-Woodford Patient Capital Trust now set to wind down after a disastrous run, featured in all but two months.
Examining trends across HL and AJ Bell, Smithson (SSON ) appeared most frequently across the sold lists, while Nandi also highlighted the unpopularity of private equity trusts.
The spike in demand for North American equity trusts in November, with the bullish market sentiment that followed the US presidential election result, appears to have dropped off.
In December, JPMorgan American (JAM ), Baillie Gifford US Growth (USA ) and JP Morgan US Smaller Companies (JUSC ) largely dropped off most-bought lists, while the Baillie Gifford trust came in eighth on AJ Bell’s most-sold list.