Scottish Mortgage no longer most bought trust as Fundsmith Equity claws back 10th

Scottish Mortgage is no longer the most bought investment trust in the UK, according to the Interactive Investor Most Bought List, as the popular retail pick falls into second.

The growth trust was eclipsed in September by Blackrock World Mining, a commodities-focused trust which is up 15 per cent in the last three weeks and was previously ninth on the list.

Performance for Scottish Mortgage was particularly weak over the last three years, falling 39 per cent to a sector average of 14, but it has managed to make a comeback, growing 25 per cent in the last year.

This is the first time in almost a year that the trust has not topped Interactive Investor’s most bought list.

Meanwhile, a new entry to the list was 3i Group, the largest trust in the UK and majority owner of Action, the European discount store.

The trust has been hit in recent days by a rumoured short selling campaign against it by Shadowfall Capital, but is still up more than 50 per cent in the last year thanks to its Action investment.

Looking to the most bought funds, and Terry Smith’s Fundsmith Equity fund managed to claw back to the number 10 spot after falling off the most bought list in August.

Fundsmith Equity topped the list as recently as March, but slowly sunk down the list, coming fifth in May and then eighth in July. Its drop-off in August was its first time off the most bought list since Interactive Investor began tracking funds in 2018.

The fund has been slighted for its performance, growing only 13 per cent in the last three years compared to a sector average of over 15 per cent, while also landing on the ‘Spot the Dog’ list in March, where investment platform Bestinvest calls out poorly performing funds.

The other notable trend in most bought funds was the decline of tech funds, with the L&G Global Technology Index moving from first to fourth place, Allianz Technology dropping from eighth to ninth, and Polar Capital Technology exiting the top 10 entirely.

“In what could be the start of a prolonged trend, investors have become less enthusiastic about technology shares over the past month,” said Kyle Caldwell, funds and investment education editor at Interactive Investor.

While tech funds have performed strongly over the last couple of years, Caldwell noted that whenever there’s a strong short-term period for a sector or theme, “it’s prudent to reexamine whether your overall exposure needs trimming back to keep a lid on risk”.

Most bought equities

Oil giants BP and Shell were the big winners of the most bought equities, with BP shooting up from third in August to first, while Shell entered the top ten.

“Falls of over nine per cent for oil majors BP and Shell over the month on the back of a weaker oil price were enough to lure back investors, with the additional attraction of generous dividend yields,” added Richard Hunter, head of markets at Interactive Investor.

Nvidia was pushed down to second by BP’s rise, but despite a summer lull, the chip maker still added 12 per cent to its share price throughout September, taking year-to-date gains to 152 per cent.

The usual suspects of strong income generating stocks also remained in the top ten, like Phoenix Group and Legal & General, which have dividend yields of 9.5 per cent and 9.1 per cent respectively.