Rights & Issues Investment Trust Ord
UK Smaller Companies
Rated Fund 2018-19. Concentrated portfolio for adventurous investors
Crowned the Best UK Growth Trust in Money Observer’s 2018 investment trust awards, this is a self-managed trust.
It has been run by Simon Knott, a low-profile ‘deep value’ investor, for almost 35 years. He has a fantastic long-term record, with the trust’s net asset value per share rising 600% over the past decade.
The manager owns a chunky amount of the shares, which provides some alignment of interests between the board and shareholders. However, it also entails a high level of key man risk. The trust’s annual report recognises Knott as ‘crucial to performance and the loss of the investment director could adversely affect performance in the medium term’
The portfolio is also highly concentrated, with almost all of the assets invested in 20 investments. Knott believes that rigorous risk analysis of his investments helps to control risk despite the concentrated portfolio. He keeps turnover low, which helps to minimise costs and achieve investment consistency.
In 2017, when stock markets were riding at record highs, Knott conceded to struggling to find companies to buy at such elevated levels, choosing instead to spend money on buying back the trust’s shares. This has narrowed the trust’s discount to net asset value. It was approaching 28% in early 2016, but stood at 7% at the end of 2018, boosting returns.
Given such a strong run and the high level of risk inherent in this trust, David Liddell, a director of IpsoFacto Investor, an online investment advisory service, reckons it “should be avoided by the more risk-averse”.
Narrative and ratings content all as of 01 January 2019.See all Money Observer rated funds
|Scapa Group PLC||11.29 %|
|Treatt PLC||10.42 %|
|Hill & Smith Holdings PLC||10.14 %|
|Vp PLC||9.97 %|
|RPC Group PLC||9.22 %|
|Colefax Group PLC||7.29 %|
|Macfarlane Group PLC||7.22 %|
|Renold PLC||4.46 %|
|Spirax-Sarco Engineerin||4.43 %|
|Electrocomponents PLC||3.88 %|
|United Kingdom||100.00 %|
|Consumer Cyclical||27.78 %|
|Basic materials||27.55 %|
Data provided by Morningstar.
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