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Latest investing themes

Published: 18 October 2016

Global diversification and income generation appeared to remain the priorities for Alliance Trust Savings customers in September.

July and August saw some take advantage of opportunities presented by the EU referendum, with a spike in sales of property and airline equities that had seen their market prices hit by the result. However, the overarching themes of the 2016 investing year remain largely intact, according to the latest Top 20 investment lists for the platform.

The global dimension dominates

Virtually all the best-selling equities, investment trusts and open-ended funds on the Alliance Trust Savings platform last month shared a global dimension. The top trusts and funds were primarily invested in overseas companies and UK-listed multinationals, while the most popular equities were largely those deriving significant chunks of their earnings from non-UK operations.

Equity sales demonstrate that income is also in demand

Investor appetite for income appeared similarly healthy in the month after the Bank of England lowered the base rate to 0.25%.

It was most evident in sales of equities. Lloyds Banking Group was again the most purchased stock on the platform. This was despite the bank, which returned to the dividend register only last year, prompting speculation over future dividends by warning in July that “capital generation may be somewhat lower in future years than previously guided".

Two UK-listed multinationals with significant overseas earnings were in the top three for equity sales, in the form of Royal Dutch Shell and GlaxoSmithKline. Financial stocks were prominent too, with Aviva, Royal Bank of Scotland and Standard Life joining Lloyds in the top 10 in September and L&G and HSBC not too far behind.

The buying opportunities presented by the EU referendum result were less evident in September’s Top 20 equity list than in the previous two months. While Easyjet remained among the best-selling equities, the housebuilders that were widely bought in July and August were less popular, with Persimmon sliding down the list and Taylor Wimpey slipping off it altogether.

Sports Direct again appeared among the best-selling equities for September, having featured for the first time this year in August. Investors may have been taking advantage of a weakening in the retailer’s share price in recent weeks amid controversy over working practices at the company and a warning at its AGM of a fall in profits.

The themes continue for Investment Trusts and funds

The buying patterns on the platform have been similarly consistent this year when it comes to investment trusts, with a core of global equity vehicles proving the most popular month after month. That trend has strengthened in the wake of the EU referendum as investors have diversified away from UK and regional exposure.

In September the Scottish Mortgage Investment Trust was again the most popular, attracting the most sales for the fourth time this year and also topping the year-to-date table. Almost half the Trust’s assets, which favours global tech stocks, is invested in the US, with Europe and Asia also accounting for significant holdings. Personal Assets Trust, the best seller in August, was close behind, followed by Alliance Trust, another perennial in that list.

The exceptions to the global theme in September were the UK Finsbury Growth & Income Trust - although it invests primarily in firms that derive their earnings from global operations - and the Merchants Investment Trust.

The Merchants Investment Trust is a UK equity income trust that sits among the ‘dividend heroes’ recognised by the Association of Investment Companies for raising their dividends year after year. Several other ‘dividend heroes’ are perennial favourites with investors on the Alliance Trust Savings platform, including the City of London, Alliance Trust and Murray International trusts.

The most popular open-ended fund in September was the global Fundsmith Equity fund, which is also the top seller year-to-date. This fund has two share classes in the top five for September and in the top five year-to-date.

Another top selling fund for both September and year-to-date is the Vanguard Investments UK LifeStrategy 60% Equity Fund, which sits in the IA Mixed Investment 40%-85% Shares sector. Around a fifth of the fund is invested in global fixed interest and a quarter in North American equities, underlining the global flavour of the demand from investors.

The overall picture is one of consistency

While the EU referendum and other developments have created shorter-term buying opportunities, sales figures suggest that investors on the Alliance Trust Savings platform have sought to maintain global diversification.

The most popular equities, trusts and funds in September have held that status throughout 2016, with the composition of the best seller tables remaining largely the same regardless of events and market conditions.

house and money

Important information

These articles are designed to help investors make their own investment decisions. They do not constitute a personal recommendation to invest. If you have any doubts as to their suitability you should seek expert advice. Please be aware that the value of investments can fall as well as rise so you could get back less than you invest.

Your existing pension may have valuable benefits which you might lose when you transfer.

Laws and tax rules may change in the future without notice. The information here is our understanding in September 2016.This information takes no account of your personal circumstances which may have an impact on tax treatment.

Past performance is not a guide to future performance.

Resources for you

View the latest Alliance Trust Savings Top 20 investment lists.

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Alliance Trust Savings Limited is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number 116115. Alliance Trust Savings gives no financial or investment advice.