September's 10 most-bought trusts
The exception to the rule is Woodford Patient Capital, which was the second most-bought trust last month for the second consecutive month.
The trust enjoyed a brief period at the top following its record-breaking launch in April this year, but was soon knocked off by Scottish Mortgage, which - excluding April - has been the most-bought trust on Interactive Investor for more than 18 months.
The only new entry to the table this month was Money Observer Rated Fund Henderson Smaller Companies which was the tenth most-bought fund in September following a one-month absence.
UK equity income fund City of London climbed two places to the fifth slot last month. Launched in 1891, City of London has the longest track record of dividend increases of any UK listed investment trust.
According to the Association of Investment Companies (AIC), City of London has hiked its dividend every year for the past 49 years. The trust currently yields 4 per cent, which is 0.5 per cent above the sector average of 3.5 per cent.
Scottish Mortgage and Henderson Smaller Companies are also top dividend payers, having increased their payouts to shareholders every year for the past 32 years and 12 years respectively. Witan, September's seventh most bought fund, is also one of the AIC's so-called 'dividend heroes' having increased its dividend every year for the past 40.
STOCK MARKET VOLATILITY
Jupiter European Opportunities - also a Rated Fund - climbed one place to be the eighth most bought fund in September. BlackRock World Mining, Witan and Fidelity China Special Situations all fell one place to sixth, seventh and ninth place last month respectively.
All of the most-bought trusts experienced tough trading conditions in September, with not a single one delivering a positive share price return.
Biotech Growth was the worst performer, shedding nearly 20 per cent in the month to 30 September as the biotechnology sector experienced one of its worst periods of the past three years.
Woodford Patient Capital was the second worst performer as shares shed nearly 8 per cent of their value, bringing the trust's share price to net asset value premium down to 9.4 per cent from a high of more than 15 per cent earlier in the year.
This is, however, still the highest premium in the UK all companies sector by a country mile (the sector average is currently a 0.6 per cent discount).
The best performer was Finsbury Growth & Income, which shed just 0.4 per cent over the period as manager Nick Train's famously defensive positioning paid dividends.
|Rank||Name||Sector||Change since August||1 month return to 30 Sept (%)||3 yr return to 30 Sept (%)|
|2||Woodford Patient Capital||UK all companies||Hold||-7.8||n/a|
|3||Biotech Growth||Biotechnology and healthcare||Hold||-19||116.2|
|4||Finsbury Growth & Income||UK equity income||Hold||-0.4||58.4|
|5||City of London||UK equity income||+2||-1.9||37|
|6||BlackRock World Mining||Commodities and natural resources||-1||-6.5||-58.3|
|8||Jupiter European Opportunities*||Europe||+1||-1.8||63.9|
|9||Fidelity China Special Situations*||Country specialist: Asia Pacific||-1||-1.3||68.9|
|10||Henderson Smaller Companies||UK smaller companies||New entry||-4.4||94.3|
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
Net asset value
A company’s net asset value (NAV) is the total value of its assets minus the total value of its liabilities. NAV is most closely associated with investment trusts and is useful for valuing shares in investment trust companies where the value of the company comes from the assets it holds rather than the profit stream generated by the business. Frequently, the NAV is divided by the number of shares in issue to give the net asset value per share.
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
A term applied to raw materials (gold, oil) and foodstuffs (wheat, pork bellies) traded on exchanges throughout the world. Since no one really wants to transport all those heavy materials, what is actually traded are commodities futures contracts or options. These are agreements to buy or sell at an agreed price on a specific date. Because commodity prices are volatile, investing in futures is certainly not for the casual investor.
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.