Investment Trust - July 2023 update

What is the AJ Bell Investment Trust Select list?

The AJ Bell Investment Trust Select list is designed to lighten your research load. There are hundreds of investment trusts out there – so we’ve narrowed the field by selecting a high-quality shortlist of trusts we believe can deliver on their objectives over the long-term. To make the list, each trust needs to pass our robust, independent selection process.

What have we changed?

We keep our Investment Trust Select list under constant review to ensure we have the highest conviction in the trusts on the list, and to look for other trusts with better potential to achieve their objectives.

As a result of this work, we recently removed Bankers Investment Trust, Troy Income & Growth and added Personal Assets Trust.

Why have we removed these from the Select List?

Bankers Investment Trust is managed with a multi-layered approach, running money by utilising market outlook and stock selection to achieve their objective. As such, we would expect the manager to have the flexibility to adapt to changing markets more nimbly than peers. Despite this, performance has underwhelmed over the short and long term against the peer average and the trust’s benchmark, FTSE World Index.

As well as aiming to outperform the index, the trust targets an income yield in line with CPI. The managers of the trust have continually delivered dividend growth, but with inflation proving difficult to budge, the income is no longer enough to make up for the drag on capital growth. As such, we’ve lost conviction in the strategy and believe better alternatives can be found elsewhere in the broader global sector.

Troy Income & Growth’s focus on capital preservation has long been a core tenet of its investment process, a feature seen throughout Troy Asset Management and a factor underpinning the fund’s inclusion on the list. The strategy saw team changes over recent years, including the departure of its longstanding manager, Francis Brooke. The fund has pivoted away from or scaled back positions across sectors such as oil and gas, tobacco, and banks, with the incoming management team having nudged the portfolio towards greater focus on dividend growth. As this is a new process and needs time to bed in, our conviction in the fund is not what it was.

Why have we added this trust?

Personal Assets Trust is a flexible multi asset strategy managed by Troy Asset Management. Like the company itself, the trust focuses on capital preservation and steady returns whatever the market backdrop. Flexibility is a key feature, as the manager can vary allocation to the four asset classes (equity, fixed income, gold and cash) depending on their market outlook.

Since 2009, the trust has been managed by Sebastian Lyon, co-founder of Troy. His experienced management team have a long track record of managing multi asset vehicles in all weathers. Being able to tap into this experience is, we believe, a key advantage to investing in this trust. We also believe the trust offers defensive protection, as well as the flexibility to capture positive returns to create steady returns over time.

The AJ Bell IT list is designed to help you choose your investments but isn’t a personal recommendation. You may own trusts not included on the list – this doesn’t mean we recommend that you sell them. If you’re not confident about making your own financial decisions, or are looking for advice, you should speak to a suitably qualified financial adviser. Remember that the value of investments can change, and you could lose money as well as make it.