Investors are going global this month; favouring investment trusts dotted around the globe for broad geographical appeal. The most popular closed-end funds on Morningstar.co.uk in May offered investors exposure to equities from the US, Asia, Europe, the UK and Central America.
The process has paid off for investors, who will have seen their cash double
The top investment trust of the month was Scottish Mortgage (SMT), which is rated Gold by Morningstar analysts. Analysts tout the trust as one their favourites for global equity exposure. Run by investment veteran James Anderson, who is invests for the long term when looking at companies and doesn’t get caught up in short-term trends or market noise. It is a process which has paid off for investors, who will have seen their cash double over the past three years.
The second most popular trust over the past month has been Aberdeen Asian Income (AAIF) – another closed-end fund rated Gold by Morningstar analysts. Run by Asian equities master investor Hugh Young, the trust has steadily delivered on average 10% a year to investors over the past decade. The last 12 months have not been as stellar – up just 1% – but any gain is better than a loss in tricky market conditions. Large holdings in Australia will have been negatively affected by falling commodity prices; the trust now has 8% in basic materials. The largest sector weighting is in financial services – make of that what you will.
Finsbury Growth & Income (FGT) – another Gold Rated trust, these are high quality picks from May’s investors – comes in third place. Manager Nick Train draws on his three decades of expertise, which cover a number of market cycles. Train selects UK-listed companies from the bottom up and looks for unique and strong franchises that can prosper through a number of business cycles. He sells a stock only if he no longer considers it of sufficient quality, or when its growth in value causes it to become too large a proportion of the portfolio, at which point he will trim it.
Global equity investment trust Murray International (MYI) underperformed its peers last year, but so far in 2015 is up 4%. This Gold Rated trust is a long term holding with relatively steady past performance, up an average of 12% a year for the past decade. Parent house Aberdeen’s approach has been tried-and-tested across a variety of market conditions and they have underperform significantly before. Aberdeen’s focus on quality, and its unconstrained, long-term investment approach, means it typically lags momentum-driven markets where low-quality names rally the most.
The fifth most popular investment trust on Morningstar.co.uk is the only one in the top five that is not Gold Rated. In fact it has no rating at all, having only launched seven weeks ago. Neil Woodford’s Woodford Patient Capital Trust (WPCT) invests up to 75% smaller companies – a mix of unquoted and quoted equities – with the remainder invested in larger undervalued companies. These larger companies help provide liquidity, funding and stability in the initial stages of investment, while the manager finds suitable holdings.
