Investors checking the health of stocks are shunning the US

Tech stocks, including health tech, are expected to perform well in the next year | Viktor - stock.adobe.com

The survey of 204 investment trust investors was carried out by Research in Finance. When asked what they expected to be the worst performing sector, 29 per cent of respondents chose the US, followed by 26 per cent who said property would be worst performing.

Perhaps surprisingly, given investors’ concerns about the US, the best performing sector was expected to be technology (31 per cent of respondents), followed by global equities (24 per cent) and the UK (22 per cent).

There has been a shift from growth to value among private investors in investment trusts, although growth remains the more popular approach. Some 37 per cent of respondents now favoured a value style, up from 27 per cent last year, while 42 per cent preferred a growth approach, down from 51 per cent.

One investor said: “Because of economic slowdown I favour the value approach since last year, but I am not keeping my eyes shut on growth. I am very much interested in growth in the technology sector.”

Another said: “My portfolio is well balanced across growth and value, with my recent purchases looking to move the portfolio away from the US and growth stocks into a more value approach.”

Nick Britton, research director of the Association of Investment Companies (AIC), said: “Investment trust investors are still fans of the tech growth story, but some are clearly becoming nervous about having too much exposure to highly valued parts of the market.

“While they aren’t necessarily slashing their US exposure, they are certainly warming to a number of sectors that have been out of favour but where recent performance has picked up, including the UK, Europe and emerging markets.”

The AIC represents a broad range of investment trusts and venture capital trusts. It said its vision is for closed-ended investment companies to be understood and considered by every investor. The AIC has 281 members and the industry has total assets of about £269 billion.

Oliver Crawford, research manager of Research in Finance, said: “Investment trust holders are growing increasingly cautious about over-concentration in US stocks. While they aren’t abandoning US equities altogether, concerns overthe high valuations of technology shares and a possible correction are prompting a shift.

“Our research shows that investors are now actively looking to rebalance towards other regions, with the UK and Europe gaining notable favour compared toa year ago.

“Investors are also telling us that they are becoming more interested in investment trusts with a ‘value’ approach, as they see these as offering greater stability and resilience.”