Five trusts on an attractive discount
Over the past few years, multi-asset managers have increasingly turned to investment trusts as a way...
Last week, we looked at the gamification of investing amongst millennials. We discussed the short-term thrill and often short-term time horizon for those on investing app’s like Robinhood. The app gained approximately 3 million new users last year and, as we heard on our podcast, the user base on average is around 31 years of age.
The most-held stocks on the platform are referred to as the ‘leaderboard’ and are often some of the highest-profile names on the market. Of course, they can be established companies like Apple, or those making headlines, such as GameStop or AMC. But there’s a less risky way to gain exposure to these names.
“It’s not that we use technology, we live technology.” — Godfrey Reggio, American director
So, what can we learn from this leaderboard? There are arguably two main areas of focus: electric vehicles and technology.
Already an attractive area, investors are now also enjoying a rare moment in history where an established market is being legislated to shift rapidly from one technology to another in a very short time frame. The transition to electric vehicles and alternative transportation is a key theme.
Scottish Mortgage Investment Trust has a holding in EV makers Tesla and NIO^, while M&G Optimal Income has a long-term holding in both General Motors and Ford. President Biden recently test drove the new Ford F-150 Lightning — the electric vehicle Ford is manufacturing at a plant in Dearborn, Michigan.
Earlier this month, Royal Dutch Shell announced a new plan to roll out 500,000 EV charging stations worldwide in just four years*. A holding in The City of London Investment Trust^, the company gave charging infrastructure a huge boost and the move will also play a critical role in Shell’s decarbonisation efforts.
As people look to swap diesel and petrol cars for electric vehicles, another beneficiary could be AutoTrader, a holding in BlackRock UK Absolute Alpha^^. The company specialises in new and secondhand automotive sales.
Technology can be a risky sector for investors, but it also promises significantly more growth. The top five companies in the S&P 500 are all tech companies: Alphabet, Amazon, Apple, Facebook and Microsoft. Alone, they account for around 18% of the S&P 500**. Interesting, However, Alphabet (Google) doesn’t feature in the top 50 stocks on Robinhood.
Apple, the $2 trillion giant, continues to be popular with millennials and is a holding in AXA Framlington American Growth^^ and BMO Responsible Global Equity^^. Microsoft, a holding in Brown Advisory Global Leaders^^, and Amazon, a holding in both T. Rowe Price US Large Cap Growth Equity^^ and Threadneedle Global Extended Alpha^^, also featured on the top 10 stocks amongst Robinhood users.
Alibaba, one of the world’s biggest online commerce companies, is another popular option. It is a top ten holding in Fidelity Asia Pacific Opportunities^^, Invesco China Equity^^ and Ninety One Asia Pacific Franchise^^.
Often overlooked in the technology space are some of the firms that work behind the scenes to make businesses run more efficiently. One stock that should be right up the alley of millennial investors is Salesforce. The SaaS company is a holding in Invesco Global Focus^^ and works to power companies worldwide.
Looking for something else? Read about investing in blockchain technology
^Source: fund factsheet, 31 March 2021
^^Source: fund factsheet, 30 April 2021
*Source: Intelligent Living, 3 May 2021
**Source: slickcharts.com, 20 May 2021