The most consistent investment trusts over the past decade

Analysis by the Association of Investment Companies reveals the top 20 most consistently outperforming investment companies over the past 10 years.

Neil Woodford’s rise and fall from grace highlights the dangers of blindly backing a fund manager on past reputation alone.

The trait that most investors desire above all when handing over their cash to a professional fund manager is consistency, but finding a winner can be an uphill task.

To help readers focus their sights on the superior options, Money Observer’s Rated Funds list for 2019 features 201 actively managed unit trusts, open-ended investment companies, investment trusts and investment companies, spread across multiple asset classes.

The majority of Rated Funds have made consistently superior returns against a relevant peer group over at least three years – one reason that the now-gated Woodford Equity Income fund never made the cut.

Its stablemate Woodford Patient Capital, however, was included as a ‘wildcard’ selection for 2018, which proved to be a good call after a year on the list, so it was therefore retained in 2019. Money Observer has subsequently suspended WPCT’s Rated Fund status, pending clarification over the state of the portfolio and the manager’s position. More details are available here.

In the hunt for consistently good returns, recent research by the Association of Investment Companies (AIC) provides another useful aid for investors.

The AIC has updated its annual league table of the most consistently top-performing investment companies over the past 10 years. Trusts are ranked by discrete annual share price total returns and benchmarked outperformance against the overall average trust. In instances where two trusts had the same consistency score, volatility of returns (standard deviation) was used to differentiate between them.

The three investment companies which outperformed most often over the past 10 years are Finsbury Growth & Income, Jupiter European Opportunities and BlackRock Smaller Companies. Each beat the average investment company return nine times over the last decade but it was lower volatility of returns that dictated the top three positions.

In terms of sectors, nine of the top 20 most consistent trusts invest in in smaller companies, either globally, specific regions or in unquoted companies. Six of the 20 companies invest in smaller companies and three are from the private equity sector investing in unquoted companies.

Commenting on the findings Annabel Brodie-Smith, communications director of the AIC, says: “It’s useful to see which investment companies have outperformed most often over the last decade.

“Of course, past performance isn’t a guide to the future and there is a range of information you should consider, such as the strategy, the manager, whether the company trades on a discount or premium, gearing and costs, before deciding whether an investment company is the right one.”

Top 20 most consistently outperforming investment companies over 10 years to end of May 2019

Rank Company AIC sector No. of years above
the overall weighted average
Volatility of return % share price total
return over 10 years to 31 May 2019
  Overall weighted investment company average       241.67
1 Finsbury Growth & Income UK Equity Income 9 14.79 460.96
2 Jupiter European Opportunities Europe 9 21.84 549.04
3 BlackRock Smaller Companies UK Smaller Companies 9 22.2 632.66
4 JPMorgan American North America 8 11.45 321.4
5 Alliance Trust Global 8 14.03 234.85
6 BMO Global Smaller Companies Global Smaller Companies 8 16.55 351.11
7 Standard Life Investments Property Income Property - UK Commercial 8 16.97 297.86
8 Pantheon International Private Equity 8 17.02 463.29
9 JPMorgan US Smaller Companies North American Smaller Companies 8 18.01 453.8
10 BlackRock Throgmorton UK Smaller Companies 8 19.44 561.14
11 Lindsell Train Global 8 20.63 1483
12 Baillie Gifford Japan Japan 8 20.66 467.1
13 Electra Private Equity Private Equity 8 22.66 413.26
14 Henderson Smaller Companies UK Smaller Companies 8 23.55 533.27
15 Polar Capital Technology Technology & Media 8 23.85 630.78
16 Volta Finance Debt - Structured Finance 8 59.22 2093.94
17 Tetragon Financial Flexible Investment 8 91.37 2081.27
18 North American Income North America 7 12.9 300.91
19 Invesco Perpetual UK Smaller Companies UK Smaller Companies 7 13.83 412.52
20 ICG Enterprise Private Equity 7 14.66 240.92

 

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