Want a global investment trust? Here’s how 15 differ
There are many options for an investor wanting to put their money to work right around the world.
Even if you’ve narrowed it down and decided to go for an investment trust instead of an open-ended active fund or a passive exchange-traded fund (ETF), choosing the trust for you can still seem a daunting task, particularly when there are 15 of them in the Association of Investment Companies’ (AIC) global category.
In this article we help you understand the differences between all the global investment trusts listed on the London Stock Exchange, their objectives and the way they choose to invest.
SCOTTISH MORTGAGE - TARGETS GROWTH COMPANIES INCLUDING UNQUOTED BUSINESSES
A retail investor favourite is Scottish Mortgage (SMT), run by Baillie Gifford. The trust, which has more assets than any other in the category with over £19 billion, is global rather than Scottish and has nothing to do with mortgages.
Its style is growth investing and describes itself as a way for investors to access the world’s most exciting growth companies. It has been quick to shoot down suggestions it’s a technology fund
(top holdings include the likes of Amazon, Alibaba and Tencent) and instead says its approach is to look at companies enabled by technology.
MONKS - DIVERSIFIED EXPOSURE TO GLOBAL GROWTH
Given the popularity and success of Scottish Mortgage in the past year, it can be easy to forget Baillie Gifford also has another global investment trust, Monks (MNKS).
The £2.9 billion trust takes a more diversified approach than Scottish Mortgage with over 100 stocks in the portfolio compared to 96 for SMT, while the largest 10 holdings only account for roughly 20% of the portfolio compared to over 48% for Scottish Mortgage.
While it also invests in the likes of Tesla and Amazon, other top holdings include tech investors Naspers and Softbank, as well as budget airline Ryanair (RYA).
F&C - HIGHLY DIVERSIFIED AND CAUTIOUSLY MANAGED WITH EXPOSURE TO MORE THAN 450 INDIVIDUAL FIRMS WORLDWIDE
The second biggest in terms of assets is F&C Investment Trust (FCIT), which markets itself as something of an all-rounder and we view it as a good option for a beginner investor looking for their first investment.
Some investment trusts and funds, including ones mentioned further into this article, prefer a focused approach, investing in as low as 30 to 40 stocks to get best exposure to their highest conviction ideas.
F&C goes the other way. A spokesman says: ‘As the world’s oldest collective investment scheme, F&C Investment Trust’s aim is to generate long-term growth and income for investors through its highly diversified and cautiously managed portfolio, giving exposure to over 450 individual companies from around the world.’
MARTIN CURRIE GLOBAL - A CONCENTRATED PORTFOLIO FOCUSED ON MEGATRENDS
On the opposite end of that spectrum is Martin Currie Global Portfolio (MNP), which holds just 30 stocks with over 40% in its top 10 holdings.
Its portfolio ideas are driven by three overriding megatrends – the future of technology, demographic change and resource scarcity.
Like a lot of global trusts, its top holdings include the likes of Microsoft, Visa and Taiwan Semiconductor, but others include medical technology company Masimo, luxury fashion brand Moncler and industrial giant Linde.
Third on the list with most assets is Alliance Trust (ATST), which aims to generate attractive total return from both capital growth and a progressive dividend. Different to most other investment trusts, it uses a panel of third party fund managers, deemed to be the cream of the crop, to pick stocks from around the world.
ALLIANCE TRUST - BLENDS THE TOP PICKS OF HIGHLY-RATED FUND MANAGERS
A spokesperson says the portfolio ‘provides UK investors exclusive access to the high conviction investment ideas of some of the world’s best stock pickers, making it a core equity holding for every generation’.
While its approach may be different, some of the stocks it invests in are similar to other global trusts and include the US tech giants like Apple, Amazon, Alphabet, Facebook and Microsoft, as well as other popular names among global stockpickers including Alibaba, Visa and Mastercard.
WITAN - RECENTLY REVAMPED PORTFOLIO WITH GREATER FOCUS ON GROWTH, USES PANEL OF THIRD-PARTY MANAGERS
The other trust which follows the same third-party approach is Witan (WTAN), which has a clear aim to deliver a total return ahead of its benchmark, 85% of which is made up from the MSCI All
Country World index and 15% from the MSCI IMI UK index, together with growth in its dividend ahead of inflation.
While it may follow the same general approach as Alliance Trust, the portfolio is rather different, with its top holding at 3% being the GMO Climate Change Fund, followed by other trusts Apax Global Alpha (APAX), Syncona (SYNC) and BlackRock World Mining (BRWM). It does also invest in individual companies.
BANKERS - FOCUSED ON CASH GENERATIVE FIRMS WHICH CAN GROW DIVIDENDS
Another popular dividend-paying trust is Bankers (BNKR), run by Janus Henderson. It aims to offer both growth and income and has a clear objective to achieve capital growth in excess of the FTSE World Index and dividend growth greater than inflation, as measured by CPI.
A spokeswoman for Janus Henderson says the trust primarily employs a bottom-up, valued-based investment process to identify opportunities and ‘pays particular regard to cash generation and dividends’. Its top holdings include Estee Lauder and, like other global trusts, Apple, Visa and Mastercard.
SCOTTISH INVESTMENT TRUST - TAKES A CONTRARIAN APPROACH TO MARKETS
The global trust currently offering the highest dividend yield at 3.3% is Scottish Investment Trust (SCIN), a self-managed value-focused trust which says it takes a contrarian approach to global stock markets, viewing them as ‘irrational and ultimately inefficient’.
Its top holdings include three major mining firms – Newmont, Barrick Gold and Newcrest – as well as Pfizer, whose shares have not moved much in a year despite its Covid-19 vaccine, and UK stocks
BT (BT.A) and Tesco (TSCO).
The trust says: ‘Our opportunities arise at the opposite point in the cycle – when a downturn leads to excessive pessimism about a company’s prospects. This allows us to buy stocks at precisely the point when the profit opportunity is greatest.’
BRUNNER - LOOKS FOR A BALANCE OF GROWTH AND INCOME WITH FOCUS ON QUALITY STOCKS
The trust, run by Allianz Global Investors, isn’t skewed to either a growth or a value style and has both a mix of faster growing companies trading on higher earnings multiples as well as lower growth firms on cheaper multiples.
It has some overlap with other global trusts in stocks like Microsoft, Visa and Taiwan Semiconductor, but also has some lesser known names to UK investors in its top holdings like healthcare company UnitedHealth, insurer Muenchener Rueckver and life sciences firm Agilent Technologies.
MID WYND - LOOKS FOR GROWTH WITH AN EYE TOWARDS CAPITAL PRESERVATION
Another running Shares Great Idea is Mid Wynd International (MWY), which focuses on quality companies that more than anything have strong balance sheets, good secular growth prospects, high barriers to entry and little competition,
giving them the ability to maintain pricing power over time.
It looks to profit from long-term trends such as online services, automation and the emerging market consumer. Technology and healthcare stocks account for 43% of the portfolio. Alongside stocks like Amazon and Microsoft, it also holds big Japanese stocks like Daifuku (warehouse automation) and Hoya (tech and healthcare products), and has a skew towards Asia with 12% of assets in Japan and 7% in China and elsewhere in Asia.
Manager Simon Edelsten explains to Shares: ‘Mid Wynd would suit more patient investors, as our disciplined approach to company selection and valuation reduces volatility. The trust will sometimes lag fast-rising markets but should be more resilient in times of crisis, leading to strong returns over the longer term.’
AVI GLOBAL - CLEAR BIAS TOWARDS VALUE STOCKS
One trust that seemingly goes under the radar, despite holding over £1.1 billion in assets, is AVI Global (AGT), which invests in stocks firmly in the value bracket.
The trust invests in a range of companies across different regions and different market caps, while many of its top 10 holdings are investment-focused companies, including Oakley Capital Investments (OCI) and Pershing Square Holdings (PSH).
EP GLOBAL OPPORTUNITIES - LOOKS FOR UNDERVALUED EQUITIES, A CONCENTRATED PORTFOLIO WITH NO BENCHMARK
Another under-the-radar trust is EP Global Opportunities (EPG), which also takes a value approach and unlike most other trusts doesn’t have a benchmark. It has assets of £107 million.
A spokesperson tells Shares: ‘The company invests in a focused portfolio of approximately 30 to 40 global holdings, predominately in quoted equities. It may also invest a substantial portion of its assets in debt instruments, cash or cash equivalents when the investment manager believes market or economic conditions make equity investment unattractive.’
Other trusts in the AIC’s global category include JP Morgan Elect – Managed Growth (JPE), which invests in a range of JP Morgan funds as well as other investment trusts like the popular Finsbury Growth & Income (FGT), Mercantile (MRC) and JPMorgan Claverhouse (JCH).
A JP Morgan spokesperson says the trust aims to offer long term capital growth from investing in an internationally diversified range of other investment trusts, managed principally by JP Morgan Asset Management (JPMAM), as well as JPMAM open-ended funds.
One trust in the global category with perhaps surprisingly modest assets is Lindsell Train (LTI), which has just £240 million of investors’ money.
This may be down partly to its prohibitively high share price at £1,380, and also the fact other Lindsell Train strategies like Finsbury Growth & Income and its UK, global and Japan equity funds are more popular and a lot more marketed.
Over half of the trust’s assets is invested in the Lindsell Train asset management company itself and its North American fund, while other top holdings include Nintendo, Unilever,
PayPal, Heineken, Diageo and London Stock Exchange (LSEG).