Best and Worst Performing Investment Trusts

At the nine-month stage of the year, the best and worst performing investment trusts are unchanged from three months ago, after a strong quarter for China and Japan trusts 

James Gard 6 October, 2020 | 11:38AM
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Arrows up and down

As we enter the fourth quarter of the year, we can reveal the best and worst performing rated investment trusts of 2020 so far. China, tech and healthcare have been top performing trusts this year, while value and smaller companies funds have struggled. And these trends are fully reflected in the leaders and laggards of the 48 closed-end funds covered by Morningstar.

The best and worst performing trusts at the end of September (in terms of share price rather than net asset value) are unchanged from our last quarterly review at the end of June. Top of the table is the £14.5 billion Scottish Mortgage, while Temple Bar continues to languish at the bottom of the performance table.

Top performing investment trusts

Top Performing Investment Trusts

Top of the table Scottish Mortgage has delivered returns of more than 77% year to date, and this has undoubtedly been helped by the outperformance of Tesla (TSLA). Despite reducing the holding to 5% of the portfolio at the end of August, manager James Anderson retains his faith in the electric car maker. “We remain very optimistic about the future of the company,” he says. Scottish Mortgage was downgraded from Gold to Silver in August this year but Morningstar analyst Robert Starkey says the trust “continues to deliver on its unique mandate” with a “best-in class team and a well-executed process”. 

The performance trends in the closed-end space mirror those among rated open-ended funds. One notable outperforming region in September was Japan as Shinzo Abe seamlessly handed over to Yoshihide Suga. JPMorgan Japanese (JFJ), which has a Morningstar Analyst Rating of Silver, had a strong September, rising 12% in the month, which makes a gain of 30% for the year.

The presence of Bronze-rated Montanaro European Smaller Companies (MTE) in the top 10 best performers goes against the grain. Smaller companies trusts have been among the worst performing in 2020, with three from BlackRock, Henderson and Aberforth in the bottom 10. The Montanaro trust, meanwhile, has managed returns of 24% so far this year. 

China, meanwhile, has been one of the best performing stock markets this year as the economy has bounced back quickly from the coronavirus crisis. After strong performance in the third quarter, with a share price gain of more than 12%, Silver-rated JPMorgan China Growth & Income (JCGI) has moved into the second spot in our top 10. The trust is now up over 54% so far this year. "JPMorgan China Growth and Income continues to stand out for its strong management team and consistently applied process," says Morningstar analyst Chloe Qu.

Also focused on the Asia region is Schroder Asian Total Return (ATR), a new entrant into our top 10 for this quarter. The only Gold-rated fund in the top performers list, it has returned nearly 19% this year after strong performance in the third quarter. 

Bottom 10 investment trusts

Worst Performing Investment Trusts

Value-focused trust Temple Bar is now under new management, with RWC managers Nick Purves and Ian Lance taking the reins in September. The board, which has just announced a dividend cut, said the trust would maintain its value bias despite the style’s underperformance this year. While the new strategy may see a turnaround in performance, the trust remains at the bottom of our performance table for now, down an eye-watering 44% year to date in share price terms. 

Value is a common theme among many of the weakest trusts, including Bronze-rated Lowland (LWI) and Silver-rated Fidelity Special Values (FSV).

One surprise new entrant in the bottom 10 is Gold-rated City of London (CTY), whose manager Job Curtis is the longest-serving investment trust manager in the UK. The trust, which focuses on UK equity income names, has fallen 22% this year. Despite this year's share price falls, Morningstar analyst Robert Starkey says: "The combination of exceptionally experienced and stable management, a consistent process, low fees, and a focus on dividend generation make this a compelling option for investors seeking a core UK equity income option."

 

 

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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James Gard  is content editor for Morningstar.co.uk