Several investment trusts overhauled their portfolios during the market volatility of 2020 as managers chose to revamp their holdings and take advantage of depressed markets.
However, other managers saw this strategy as counter-productive and stuck to their guns.
Figures from Morningstar, collated by the Association of Investment Companies for Investment Week, revealed the investment trusts with the highest and lowest turnover ratio, with the highest at 309% and the lowest at 0.3%.
Turnover ratio is a measure of the trust's trading activity, which is calculated by taking the lesser of purchases or sales and dividing by average monthly net assets.
A turnover of more than 100% indicates an investment strategy with considerable buying and selling while a low turnover figure represents a buy-and-hold strategy.
"Investors should have been rotating really quite aggressively in the spring of last year," said Nick Purves, co-manager of the £885m Temple Bar trust.
"We felt at the time the market was offering an outstanding opportunity to find pretty reasonable business at rock bottom prices."
Purchasing - no matter what
Purves and Ian Lance only took over the mandate last October, which resulted in the high turnover. However, they said managers should have been purchasing during the period no matter what.
Similarly, the £157m Middlefield Canadian Income had a turnover three times higher last year compared to 2019, but also managed to outperform its sector over the past 12 months.
Dean Orrico, president and chief investment officer of Middlefield Capital Corporation, investment manager of the trust, said the changes were primarily a reduction in risk in Q1.
The managers of the £494m Henderson Far East Income trust and £445m Mid Wynd International trust also cited opportunities due to market volatility as the rationale for their higher-than-average turnovers.
Meanwhile, the Gulf Investment Fund said its high turnover "reflects the proactive approach the managers took to safeguarding investor returns in response to the oil price crash... and includes the effect of the tender offer in November which saw 40 million shares of the fund redeemed and cancelled."
Elsewhere, several investment companies with the top ten highest turnover ratios were a product of a manager or remit change.
This includes the £885m Temple Bar trust, £281m Baillie Gifford China Growth trust and the £32m Premier Miton Global Renewables trust.
Premier Miton's trust moved to a more focused policy of investment in renewable energy in the second half of last year. This was combined with taking "advantage of weakness in the share prices of renewable energy" in the first half of 2020, according to the fund manager James Smith.
"The share price movements seemed to us to be out of all proportion to the risks actually faced," said Smith. "We therefore substantially increased the exposure to renewable energy, from around 30% at the start of the year to over 60% by June 2020."
Laggards in focus
However, high turnover was not the right choice for all trusts.
The £345m Polar Capital Global Healthcare portfolio had the highest turnover of all investment trusts at 309%. The trust had a share price return of 7.8% for the year from the end of September 2019 to the end of September 2020.
Meanwhile, its benchmark, the MSCI All Country World Index/Healthcare, returned 15.9% in the same period.
"When set against the underperformance of the benchmark, the turnover looks excessive and perhaps unproductive," explained James Carthew, founder and head of investment company research at QuotedData.
Gareth Powell, co-manager of the Polar Capital Global Healthcare trust, said: "We had an increased turnover in holdings in Q2 2020 as we sold some of our defensive holdings and shifted strategically to the areas hit hardest by the sell-off in March 2020. This included a shift to biotech, healthcare supplies and life science tools and services."
At the other end of the scale, there are some unsurprising names such as the £2.1bn Finsbury Growth and Income trust, which is well known for its buy-and-hold strategy.
While the trust underperformed its sector over one year, with its share price returning 10.9% compared to the UK Equity Income sector's average of 32.6%, it has performed strongly over the long term. In ten years, it has returned 227.3% compared to 116.5%.
Elsewhere, the £14m Worsley trust is being repositioned from a property fund to an equity trust, with the turnover stats reflecting the period before it started buying equities. Meanwhile, £124.3m Nippon Active Value only launched in February 2020.