The top 5 investment trusts to buy in a resurgent UK stock market?

When people start to get bullish about shares but aren’t sure which individual ones to buy, many will go for investment trusts.

I’ve just been looking at the most popular investment trusts bought by Hargreaves Lansdown customers in April. They’re not what I’d expect, and they say a few interesting things.

In terms of net buys, these are the top five:

• Scottish Mortgage Investment Trust (LSE: SMT)
• JPMorgan Global Growth & Income
• BBGI Global Infrastructure
• City Of London Investment Trust (LSE: CTY)
• BlackRock World Mining Trust

Just outside these we see Greencoat UK Wind, so at least we haven’t forgotten alternative energy.

Surprising choices

But the surprising thing, to me at least, about the top five is that UK investors are not more keen on UK-focused trusts.

And that’s when the FTSE 100 has just hit an all-time high. And confidence in the UK stock market, again according to Hargreaves Lansdown, is firmly on the rise.

In fact, only one of the five most popular trusts focuses on UK stocks, and that’s City of London Investment Trust. It aims for long-term growth in income and capital, mainly from shares on the London Stock Exchange.

It’s famous for having lifted its dividends for 57 years in a row, and is on a forecast yield of 4.9%.

UK stock market shunned

But it’s the only one of the top five to target what is arguably the best value among the world’s leading stock markets. That’s the surprise for me.

I also didn’t expect Scottish Mortgage Investment Trust to take the top spot. Its aim is to “identify, own and support the world’s most exceptional growth companies.”

And no, those are not UK companies.

Nasdaq growth

They’re mostly US stocks, and most of them are listed on the Nasdaq growth index.

Scottish Mortgage’s two biggest holdings are Nvidia — popular with artifical inteligence (AI) investors — and ASML, also in the semiconductor business. The two make up 16% of the trust’s holdings between them. Tesla is there too, at 3%.

I’m not saying these are not great growth stocks — they might be.

But the Nasdaq has been climbing again. It’s recovered all of its 2022 losses, and then some. It’s up 125% in the past five years now, compared to just 8% for the FTSE 100.

Global trusts

The other three trusts in the top list for April are clearly also global. And that’s when the UK market is awash with UK-centric trusts, many of which I think look like great long-term investments at current valuations.

So, is there a bull market to come? And if so, will it be one focused on global growth rather than UK dividend income? It wouldn’t be the first time, that’s for sure.

Seeing UK investors, now they’re coming back to the stock market, going for US and other global investment trusts makes me ask one question.

Does it mean UK stocks and investment trusts will stay cheap for a bit longer? I do hope so.

The post The top 5 investment trusts to buy in a resurgent UK stock market? appeared first on The Motley Fool UK.

More reading

• 2 FTSE 100 stocks I’d buy as the blue-chip index hits record highs
• The smartest dividend stocks to consider buying with £500 right now
• This forgotten FTSE 100 gem could be the best bargain on the stock market
• This forgotten FTSE 100 stock is up 25% in a year
• £8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Alan Oscroft has positions in City Of London Investment Trust Plc and Scottish Mortgage Investment Trust Plc. The Motley Fool UK has recommended Greencoat Uk Wind Plc and Hargreaves Lansdown Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.