|
| Personal finance articles |
|
|
|
Top performing investment trusts
By Hannah Ricci
If there's one silver lining to the cloud that has enveloped global stockmarkets over the last six months, it's that we've been given a timely reminder of some sound investment principles.
For instance, the importance of holding a well-balanced and diversified portfolio, the value of which isn't sunk by a fall in one market, has rarely been more crucial. Similarly, drip-feeding your investments is also a good move, advises Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC).
The value of keeping your nerve and leaving your money invested for the long term is hard to overstate. This is particularly so when it comes to investment trusts, which - more than any other investment - earn their spurs over the long term. Of course, it helps if you have picked the most consistent trusts in the first place - those that ride out turbulence and come up with the goods time and again.
But with so many investment trusts to choose from, knowing which one is right for you can seem like mission impossible. That's where the Moneywise investment trust awards come in. They identify which trusts have fared best during the recent market volatility, with managers skilled enough to cope, whatever the future holds in store.
Some managers are indeed able to make the best of the bad times - they view uncertain markets as a fertile hunting ground offering the most skilled practitioners the chance to add value for their investors.
One thing to bear in mind, however, is that past performance isn't any guide to future performance, so you should never invest on this basis alone. You need to consider your investment goals and attitude to risk, as well as a whole range of other factors, such as the strategy, resources, prospects and pricing of the trust, and the skill of its manager.
So, which trusts passed muster in all these areas - providing the most consistent returns, without taking your cash on a white-knuckle, roller-coaster ride?UK Growth and IncomeInvestment trusts in this sector aim to provide investors with a combination of income and long-term growth, which makes it a popular sector with some of the oldest, largest and lowest cost investment trusts around.
Receiving an income has the potential to dampen prospects for capital growth, yet the sector has still returned an impressive average 125.74% over the past three years, according to the AIC.
The combination of growth and income make for a relatively low-risk investment which serves as a core holding, as many are consistent performers, like this year's winner, JPMorgan Income and Capital, managed by Jamie Streeter.
As is the nature of split-caps (due to their structure, they have a limited life), the fund was actually wound up on 29 February 2008. However, it has been replaced by the new JPMorgan Income and Capital Trust, which is managed by the same team, with the same objectives.
The second-placed Perpetual Income & Growth Trust also fared well over the past year, which was a difficult one for equities. UK GrowthThe UK Growth sector has returned an impressive average of 138.69% over the past three years, although a number of factors point to harder times ahead. A slowdown in the housing market, a cut in interest rates and reduced consumer spending power mean fund managers in this sector have some tough calls to make this year.
This year's winner, Invesco's Keystone Investment Trust, has shown excellent defensive performance over the last year, with high weightings in the traditionally defensive tobacco and utilities sectors.
Close behind in second place is the Manchester and London investment trust, run by Midas.UK Smaller CompaniesIdentifying potential and long-term growth prospects is the remit of the Smaller Companies sector, and this brings with it a degree of risk. Consistent performance makes the Standard Life UK Smaller Companies the winner for the second year running.
The runner-up in this category, Invesco Perpetual UK Smaller Companies, has also fared well in a tricky time.EuropeanUK investors are often wary of European markets, but impressive average returns of 151.94% over the past three years show they could be missing out. These diverse markets provide rich and varied opportunities for those fund managers who have the skill to sniff out undervalued companies.
The winner in this sector, Jupiter European Opportunities, is managed by Alex Darwall, who has produced a high and consistent level of outperformance.
Close behind in second place is the Merrill Lynch Greater European Trust, which has been managed by James MacMillan since launch, and follows an investment strategy that gives exposure towards both old and new Europe.
This fund is set to be renamed the BlackRock Greater European Trust, if shareholders vote in favour of the company re-branding this month.Far East excluding JapanThe Far East hasn't escaped the recent turbulence, with the Chinese, Hong Kong and South Korean stockmarkets all getting off to a shaky start in January. Investing in this area is a useful diversification play, however. A small bit of exposure in the sector will complement the core of a portfolio.
Our finalists were quite a mixed bag, investing in different geographic areas. Last year's runner-up took first place this time around, and the judges agreed that the track record of the Schroder Asia Pacific Trust, under the management of Matthew Dobbs, stands out from the other contenders, over all time frames.
Rewarding investors with income, as well as the potential for capital growth, is normally associated with UK trusts, which makes this year's runner-up, the Henderson Far East Income Trust, stand out from the crowd by doing this with Far East markets. Global GrowthThis is a varied sector in terms of performance and regional weighting, with a sector average return of 145.82% over three years. There are some real opportunities for growth here, particularly for those funds seeking a high exposure to emerging markets.
With its consistent high returns, Templeton's Emerging Makets Trust stands out. Templeton's win pushes last year's winner, the SVM Global Fund, into second place. SpecialistThe sector is a tricky one to judge because it's made up of an eclectic mix of very different funds, making it difficult to compare like for like. But there are some fantastic opportunities for investors who fancy dipping their toe into something different, such as an Irish or South African trust, one specialising in mining or eco-friendly companies.
Funds in this sector represent the potential for significant capital growth over the long term, but carry with them the potential for a high level of volatility in the short term. This year's winner, the Merrill Lynch World Mining Trust, is set to be renamed the BlackRock World Mining Trust, if shareholders rubber-stamp the company re-branding this month.
The trust has been an exceptional performer, which could provide an excellent way to exploit the investment potential from the demand/supply imbalance of natural resources
The runner-up, the JPMorgan Indian Trust, illustrates perfectly the breadth of this sector.
Useful links:
|
Send Article by Email
Send Article by IM
Blog This with Y! 360
Printable View