Managers of UK investment trusts built up cash to take advantage of the immediate post-election uncertainty in markets, data from the Association of Investment Companies has suggested.
The average cash exposure of AIC UK All Companies sector investment trusts rose from 4 per cent 12 months ago to 7 per cent at the end of March this year.
According to Annabel Brodie-Smith, communications director for the AIC, this could have been “in anticipation of potential buying opportunities ahead” as the general election caused some market uncertainty.
Other fund managers have been increasing their holdings in large dividend-paying companies in the FTSE 100.
The data showed that the UK companies held by most member investment trusts were dominated by FTSE 100 companies, with “dividends no doubt being one of the key drivers”, Ms Brodie said.
She added: “The election focused attention on the UK economy and stock market, which meant it was an opportune time to look at which UK plcs are dominating portfolio holdings.
“Dividend payers dominate the top 10 companies held by UK investment companies, with banks, oil and gas and pharmaceuticals prominent.”
Rank | Company | Number of investment companies holding these shares | Investment company with largest exposure (% portfolio) |
1 | HSBC | 52 | Temple Bar (9.47%) |
2 | Royal Dutch Shell plc | 44 | Temple Bar (8.93%) |
3 | GlaxoSmithKline plc | 41 | Temple Bar (7.14%) |
4= | BP plc | 40 | Temple Bar (6.04%) |
4= | British American Tobacco plc | 40 | BlackRock Income & Growth (5.95%) |
6 | AstraZeneca | 36 | Manchester & London (7.22%) |
7 | Vodafone Group plc | 35 | Schroder Income Growth (4.30) |
8= | BHP Billiton | 33 | Murray Income (3.72%) |
8= | Legal & General | 33 | Schroder Income Growth (4.21%) |
8= | Unilever plc | 33 | Finsbury Growth & Income (9.04%) |
11 | BT Group plc | 31 | Edinburgh Investment (5.38) |
12 | Imperial Tobacco | 30 | Edinburgh Investment (5.70%) |
13 | Centrica plc | 29 | Dunedin Income Growth (3.24%) |
Source: AIC
Adviser view
Tom Diaper, independent financial planner for London-based Plutus Wealth Management, said: “I am not sure I would agree with the AIC’s view that managers could be building up cash to seek buying opportunities or going into big dividend-payers to gain income. I would think these managers are taking more defensive positions and removing a bit of risk from the table.”
