The latest poll from UK investment platform, interactive investor conducted between 23 and 25 March, shows that 26% of its investors are ‘bargain-hunting’ investment trusts – a 6% rise compared to the previous week.
Lee Wild, head of equity strategy, interactive investor, says: “The renewed focus on investment trusts, with a six-percentage point increase in barely a week in the number of bargain hunters swooping in, is noteworthy. This comes at the expense of passive options and shows that discount opportunists sometimes need to move fast. There’s always the chance that discounts widen further, but elsewhere; one thing is clear: the 36% of investors a week ago who said they thought the FTSE 100 was a buy at 5,000 are currently in the money – for now at least.”
The number of investors buying up shares to pick up a bargain remained stable (54% compared to 55% in wave 2, but up from 49% in wave one), and interest in UK shares is at its highest since this crisis started, at 72% currently compared to 70% in wave two and 69% between 28 February – 2 March in wave one. This comes at the expense of Europe, which has seen a 2-percentage point decrease in investor interest since wave two to 2%.
Richard Hunter, head of markets, interactive investor says: “With our most traded stocks tending to be predominantly FTSE 100 companies, the fall in the pound may well have tempted out more investors. With the majority of FTSE 100 earnings coming from overseas, a falling pound can be beneficial for these companies.”
Although, investors are “snapping up” investment trusts, it is important to check each individual trust’s ability to keep up payments, especially UK equity income investment trusts, according to Investors Chronicle.
The magazine goes on to give further advice: “When choosing a trust, it is important to examine the fundamentals, including how well diversified its investments are and what track record its management team has.”
The Association of Investment Companies (AIC) has also identified 25 trusts that have increased their dividends every year for at least a decade. These include less income-oriented trusts such as Henderson Smaller Companies, BlackRock Greater Europe and Fidelity Special Values.
However, not all trusts with a track record of dividend increases offer enough of a yield for investors who immediately need a good income, Investors Chronicle adds.