F&C Investment Trust has weathered countless conflicts and crises to come out the other side
Thursday 26 May 2022 Author: Tom Sieber

Sometimes it is important to get a bit of perspective, particularly when the outlook is as gloomy as it is now.

Granted that’s difficult when the governor of the Bank of England is using words like ‘apocalyptic’ and we’re experiencing the most significant war in mainland Europe in most people’s lifetimes.

Many of you will have lost money on your investments in 2022 and anyone who chased some of the more speculative investments higher last year could be sitting on some very painful losses indeed.

However, for evidence of how markets can endure through war, famine and pandemics look no further than the investment trust sector.

No fewer than 25 trusts have been around in some form or another for more than 100 years. This includes the daddy of them all, self-described as ‘the world’s oldest collective investment scheme’, F&C Investment Trust (FCIT).

Formerly known as Foreign & Colonial, the vehicle can trace its history back to 1868. The intervening 154 years have seen two world wars, two global pandemics, periods when UK inflation was more than 20%, interest rates above 15% and numerous financial crises.

And yet the trust has continued to plug away and generate returns for its shareholders through all of that and more, even increasing its dividend for 51 consecutive years.

It has become a highly diversified fund, with more than 450 stock holdings from across the world. In his latest commentary, F&C Investment Trust’s manager Paul Niven said: ‘We can expect markets to remain volatile in the short term, with the outcome of the war in Ukraine uncertain and central banks embarking on policy tightening cycles.

‘Nonetheless, F&C Investment Trust has a tremendous advantage through our corporate structure, which makes us well placed to withstand further market volatility. We remain focused on the long-term opportunities for the benefit of our shareholders.’

What lessons can investors draw from F&C’s approach at a time when things feel bleak? First, investment is a long-term exercise which rewards patience. No-one will have an investment horizon of 150 years-plus but at least a decade or more will be typical.

This means you can afford to ride out difficult periods and wait for the value of investments to recover. The second is to be diversified. Again, owning 450 individual shares isn’t realistic but through funds you can ensure all your eggs aren’t in one basket.

While 2022 has been a difficult year for markets, losses have not been evenly distributed. The previously high-flying Nasdaq index is down nearly 30% but the FTSE 100, bolstered by commodities stocks, attractive valuations and generous dividend yields is only modestly lower year-to-date.

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