Important information - the value of investments and the income from them, can go down as well as up, so you may get back less than you invest.
Some investment trusts have more than a fifth of their money in the “Magnificent Seven” US tech giants while others have no exposure at all to the likes of Nvidia, Amazon and Microsoft.
The trusts with the highest exposure have tended to outperform over the past year, thanks to a doubling in the cumulative value of the seven stocks, while those that committed less of their money to the tech stars have suffered.
Manchester & London, a smaller technology-focused trust whose market value is £272m, had 58% of its net assets in the Magnificent Seven stocks – Alphabet (Google), Amazon, Apple, Meta (Facebook), Microsoft, Nvidia and Tesla – at the end of January, including 29% in Microsoft and 22% in Nvidia.
Among larger trusts, JPMorgan Global Growth & Income had 20.7% of net assets in the Magnificent Seven at the end of January and Scottish Mortgage had 20.4% at the end of February (trusts tend to report their holdings at different times).
Some, however, have much less exposure. Henderson International Income had 4.6% in the seven stocks at the end of last month while Murray International, another trust more focused on income than growth, had no exposure at the end of last year.
The figures come from a research note published last week by Stifel, the stockbroker.
Among other large global trusts, Monks had 16% exposure at the end of last month, Alliance Trust 15.1% at the end of 2023 and F&C 11.5% at the end of February.
Witan, Bankers, Brunner and Scottish American had less than 10% in the seven companies when they most recently reported their holdings.
Not surprisingly, trusts that focus on technology have large percentages of their money in the Magnificent Seven. For example, Polar Capital Technology had 39% of assets in the seven stocks at the end of last year, while Allianz Technology had 34% exposure at the same point.
The gains made by the trusts over the past year tend to be highly correlated to their degree of exposure to the Magnificent Seven. The strongest performance among the trusts examined by Stifel came from JPMorgan Global Growth & Income, the trust with the highest exposure to the stocks. This trust achieved a 27.9% rise in its net asset value per share over the year to 14 March. Please note past performance is not a reliable indicator of future returns.
Alliance Trust has also experienced a sharp rise of 26%, partly thanks to its 15.1% exposure to the Magnificent Seven, while Monks (16% in the seven stocks) has gained 19.6%. Scottish Mortgage (20% exposure) achieved a 12.1% rise in value.
Henderson International Income and Murray International, the two trusts with the lowest exposure among those covered, also achieved the lowest growth, of 7% and 9% respectively in terms of net asset value per share.
Tech trusts did especially well. Allianz Technology rose by 53% Polar Capital Technology gained 47%.
As a reminder, shareholders will not necessarily have made the gains mentioned above because the share price of an investment trust is not normally aligned to the net asset value thanks to the existence of “discounts” and “premiums”.
The analysis above provides a snapshot of exposure to the Magnificent Seven among certain investment trusts, which are funds quoted on the stock market. Investors should also be aware of conventional, non-listed funds with high exposure. Among our Select 50 list, BNY Mellon Long Term Global Equity, Rathbone Global Opportunities and Brown Advisory US Sustainable Growth have some of the seven stocks among their top 10 holdings.
If you want to know your own exposure to the Magnificent Seven via funds, and you invest via the Fidelity platform, use the ‘Account holdings report’ within your account. You can select a benchmark to compare your portfolio with and then click ‘Export’ to view a ‘Portfolio X-ray’ report based on Morningstar data.
The report will highlight where holdings across your portfolio – even those held via funds – overlap.
Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Before investing, please read the relevant key information document which contains important information about each investment trust. The shares in these investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. Overseas investments will be affected by movements in currency exchange rates. Investments in emerging markets can be more volatile than other more developed markets. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Eligibility to invest in an ISA and tax treatment depends on personal circumstances and all tax rules may change in the future. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.
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