We reveal the sector’s outperformers over the past one, three and five years

Strong historical performance data doesn’t guarantee a fund will continue to do well in the future, so investors shouldn’t buy an investment trust solely based on how it has done in the past expecting similar returns in the future.

However, past performance, particularly over the long term, is still worth considering as it provides evidence of how well a trust has done in a variety of market conditions.

We’ve identified the investment trusts that have occupied the top quartile of their respective sectors on a one, three and five year basis, based on performance data from FE Fundinfo.

The accompanying table shows all 34 of these outperforming names and we’ve provided explanations of why they have managed to leave their peers for dust in this article.

While the following trusts have forged strong track records, investors cannot assume they’ll continue to outperform, because styles, sectors and regions can fall in and out of favour.

For instance, high quality businesses have long been in demand with investors, which alongside a stellar performance, explains the presence of BlackRock Greater Europe (BRGE) in our list.

The trust looks to spot high-quality, niche businesses on the continent trading at a discount to their estimated intrinsic value. It has significantly outperformed its benchmark FTSE World Europe ex-UK index since launch in 2004.

TRAIN STILL PASSES THE TEST

While the cult of the star fund manager is currently being questioned, well-followed Nick Train’s stellar track record still appears to hold sway and the two trusts he steers, Finsbury Growth & Income (FGT) and Lindsell Train (LTI), have made the outperformers list.

A markets veteran sometimes known as the king of buy-and-hold investing, Train runs concentrated portfolios of high-quality companies with strong brands and/or powerful franchises. Finsbury Growth & Income, which sits in the UK Equity Income sector, runs a portfolio that includes stakes in luxury goods group Burberry (BRBY), Marmite maker Unilever (ULVR) and drinks giant Diageo (DGE).

Lindsell Train is a constituent of the AIC Global sector and besides Diageo and Unilever, has positions in the likes of Nintendo and Mondelez.

INCOME QUEST

A trio of trusts from the Aberdeen Standard Investments stable are among the top performers in the UK Equity Income sector.

They are Murray Income (MUT), Shires Income (SHRS) and The North American Income Trust (NAIT), which is invested in dividend-paying S&P 500 goliaths such as Citigroup and Coca-Cola.

A long-time top quartile performer from the Flexible Investment sector is RIT Capital Partners (RCP), a capital preservation-focused trust whose net assets exceeded £3bn for the first time this summer.

This investment vehicle has the stated objective of long-term capital growth while preserving shareholders’ money through market cycles.

It invests in a diversified portfolio across a range of asset classes, both quoted and unquoted.

OVERSEAS OPTIONS

Investors seeking access to far-flung overseas markets appear to have been well served of late by JPMorgan, as its closed-ended funds focused on emerging markets pepper the top quartile performers table.

A pick-up in performance of Fidelity Japan (FJV) under the stewardship of Nicholas Price explains the trust’s status as a one, three and five-year peer group outperformer.

Pursuing a GARP (growth at a reasonable price) approach, Fidelity Japan trades on an 11.5% NAV discount despite performing strongly versus its Topix benchmark index so far in 2019.

PRIVATE EQUITY TRUSTS

Yet another theme to emerge is the demonstrable investor appetite for private equity trusts including industry HgCapital (HGT), a listed vehicle invested in unquoted software and services businesses managed by Hg, and also HarbourVest Global Private Equity (HVPE).

The top quartile performers list also attests to the ability of growth companies to reward investors with BlackRock Smaller Companies (BRSC) and Montanaro European Smaller Companies (MTE) consistently ranked as first quartile.

Popular with investors for its stellar long-run track record, BlackRock Smaller Companies is today managed by Roland Arnold, who took over as lead manager following the retirement of Mike Prentis this summer.

Meanwhile, Montanaro European Smaller Companies is delivering sector leading NAV growth and has outperformed its benchmark MSCI Europe ex-UK Small Cap index over 10, five and three-year time frames.

Investment company research outfit QuotedData says its focus is on picking stocks – identifying growing companies with strong business franchises, and high-quality management, earnings and corporate structures.


Read this article to discover the bottom quartile investment trusts.

‹ Previous2019-11-14Next ›