Which trusts manoeuvred during 2020 and which stood their ground?
Kathleen Gallagher, Investment Week, 08 June 2021 • 4 min read
Several investment trusts overhauled their portfolios during the market volatility of 2020 as managers chose to revamp their holdings and take advantage of depressed markets.
However, other managers saw this strategy as counter-productive and stuck to their guns.
Figures from Morningstar, collated by the Association of Investment Companies for Investment Week, revealed the investment trusts with the highest and lowest turnover ratio, with the highest at 309% and the lowest at 0.3%.
Turnover ratio is a measure of the trust’s trading activity, which is calculated by taking the lesser of purchases or sales and dividing by average monthly net assets.
A turnover of more than 100% indicates an investment strategy with considerable buying and selling while a low turnover figure represents a buy-and-hold strategy.
“Investors should have been rotating really quite aggressively in the spring of last year,” said Nick Purves, co-manager of the £885m Temple Bar trust.
“We felt at the time the market was offering an outstanding opportunity to find pretty reasonable business at rock bottom prices.”…
Similarly, the £157m Middlefield Canadian Income had a turnover three times higher last year compared to 2019, but also managed to outperform its sector over the past 12 months…
Premier Miton’s trust moved to a more focused policy of investment in renewable energy in the second half of last year…
Laggards in focus
However, high turnover was not the right choice for all trusts.
The £345m Polar Capital Global Healthcare portfolio had the highest turnover of all investment trusts at 309%…
“When set against the underperformance of the benchmark, the turnover looks excessive and perhaps unproductive,” explained James Carthew, head of investment company research at QuotedData.
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