Savings and investment products are important throughout our lives for either building up assets or providing the money we need to achieve our goals.
Investment trusts are particularly versatile in this context. They can help meet different objectives for investors from a young age until later in life, within different tax wrappers.
Investment trusts can be used to build up a lump sum for babies and young children within a bare trust or a Junior Isa. This money can then be drawn down later to help cover the cost of, for example, further education or the deposit on a first home.
As investors progress into their 30s and 40s and start to build up their own nest eggs within an Isa or make extra savings for retirement within a self-invested personal pension (Sipp), investment trusts can come into their own again.
Then, at pensionable age, as the income drawdown process begins, trusts can be used to produce a steady stream of cash via Sipps and Isas.
There are plenty of different investment trusts that can be used to achieve these age-related objectives, ranging from general, globally diversified trusts to more adventurous specialists.
We asked a number of independent financial advisers which trusts they believe would be suitable to meet investors' needs at various ages.
TRUSTS FOR THE YOUNG
If you want to start building up savings free of tax for children within a Junior Isa or bare trust, globally invested trusts are the classic choice. Several of these trusts offer their own in-house children's savings plans or Junior Isas.
Foreign & Colonial was the first trust to introduce a children's savings plan and Francis Klonowski of independent financial advisers Klonowski & Co believes it is still a good choice.
He says: 'The "daddy" of investment trusts has never been afraid to move with the times. Recent changes have seen it develop a truly global focus. It may never be a high flyer, but is always steady and reliable.'
As an alternative, Klonowski suggests Witan. He says 'I like Witan's multi-manager approach to achieve diversification.
'Witan's manager sets the asset allocation, then uses specialist fund managers to run different parts of the portfolio. Investors gain the expertise of 10-15 managers with different approaches and styles.'
Another type of global trust is recommended by Jason Hollands, spokesman for Tilney Bestinvest. He suggests Scottish Mortgage as an option for children.
He says 'Scottish Mortgage has a fairly high-octane, unconstrained approach to investing in global equity markets and can also allocate to unquoted companies. The focus is very much on high-growth companies.'
Alternatively, he recommends Pacific Assets, which invests specifically in growing Asian markets, such as India. Despite difficult times recently, he believes this area of the world will produce good long-term returns.
Some advisers point out that, with the advantage of time on your side, there is a good case for choosing higher-risk trusts for children. This is the view of Tim Cockerill, investment director at Rowan Dartington, who says small companies are a good investment over the long term for children.
He concedes: 'There are risks of course - political, currency, stock-specific and regional. However, BlackRock has one of the most experienced teams investing in this area and their selection process will help to reduce risk.'
Andy Merricks, head of investments at Skerritt Consultants, also believes that children will get the best returns from higher-risk investments. His recommendations are Biotech Growth or Woodford Patient Capital.
He argues that biotech companies will progress due to the demands of an ageing world population.
Biotech Growth invests mainly in biotech companies in the US, while Woodford Patient Capital, which is heavily biased towards healthcare but also holds other early stage companies, has a greater focus on the UK.
TRUSTS FOR THE MIDDLE-AGED
If you are seeking to build up a nest egg via an Isa or Sipp you may not want to see too many fluctuations in the value of your hard-earned savings.
A mixed asset trust can provide greater stability through diversification. For this reason both Johnston and Hollands suggest RIT Capital Partners.
Hollands explains: 'RIT offers investors a global investment approach which spans exposure to listed equities but also alternative asset classes such as property, private equity and hedge funds.
'This approach makes RIT a more defensive vehicle than a traditional global equity trust and so we see this as suitable for a core holding.'
Klonowski also suggests a global trust for middle-aged investors. He says: 'Monks aims for capital growth rather than income - and is therefore ideal for the "accumulation" investor. It is very internationally focused, with only 8 per cent of its assets in the UK, while almost 50 per cent are US-based.'
For investors who want to top up their UK exposure, Klonowski favours Fidelity Special Values.
He explains: 'It is a low-cost way of gaining exposure to UK companies that the manager, Alex Wright, perceives as having the potential to do well but whose current valuations do not reflect this potential.'
Advisers suggest that the other regions that investors in middle age may wish to consider are Europe and Asia.
Merricks says: 'I like European Assets, managed by Sam Cosh, because it focuses on small and medium-sized companies with the best growth potential. And, whatever else happens in Europe, European consumers won't stop consuming.'
Unlike European Assets, which excludes the UK, Jupiter European Opportunities, suggested by Hollands, invests on a pan-European basis.
Hollands says: 'The manager, Alexander Darwall, takes a "best ideas" approach, with a relatively concentrated portfolio of around 45 holdings. The portfolio has a low turnover, as Darwall is a long-term investor.'
Cockerill recommends Pacific Assets, managed by David Gait at Stewart Investors. Stock markets in Asia have not been performing brilliantly in recent years but Cockerill believes it is necessary to look further into the future.
He says: 'This is a long-term play on a dynamic region of the world where growth should be healthy for many years, but stock selection and astute management are key. Stewart Investors has one of the best records in this region of any management group.'
For a more focused investment, Merricks suggests Worldwide Healthcare, which invests in both large pharmaceutical and smaller biotech companies. He says: 'With an ageing world population and technological advances, healthcare is a theme which is not going to go away.'
TRUSTS FOR OLDER INVESTORS
If you have reached an age when you are starting to draw down your assets rather than building them up, you are likely to be looking for investments that can both provide you with a regular income and preserve the value of your capital.
The attraction of investment trusts is that they can hold reserves of income which helps them to maintain steady dividend payments.
Indeed, some trusts have managed to grow their dividends annually for 20 years or more, and several of these 'dividend heroes' are recommended for the older generation by our advisers. Cockerill suggests Bankers: 'It is a slow and steady trust that has grown its dividend for 49 years.'
Merricks favours Temple Bar. He says: 'It trundles along paying an increasing dividend each year. It hasn't done so well on the capital side recently due to its focus on the FTSE 100, but this could change and Alastair Mundy, the manager, is a safe pair of hands.'
The third of the dividend heroes is Scottish Mortgage, suggested by Francis Klonowski.
It has a relatively low yield but Klonowski points out that although investors may see income as their primary aim, they must accept that they will also be drawing down capital over time - so trusts should ideally provide both rising income and capital growth.
He says that another trust that could fall into this category is Lowland.
Hollands's recommendation is Edinburgh, the UK-focused trust managed by Mark Barnett, who has a strong record of running income-oriented funds. It invests predominantly in large and medium-sized companies.
Hollands also favours Standard Life Equity Income. He says: 'This trust invests across the full bandwidth of the UK equity market. This "multi-cap" approach means that it provides greater exposure to medium-sized and smaller companies than most other blue-chip focused equity income trusts.'
Meanwhile, Johnston's pick is Dunedin Income Growth, which is offering a good yield but has seen its share price fall over the last year or so as a result of its holdings in energy and commodity-based companies.
But Johnston points out: 'It stands to perform well if we see a recovery in these stocks, and it is well enough diversified to maintain its strong yield even if some companies reduce their dividends over the next 12 to 24 months.'
Property trusts are another source of income and two of our advisers' recommendations for older investors focus on this asset class.
Cockerill suggests Standard Life Investments Property Income. 'This trust invests in bricks and mortar commercial property and offers a strong income stream,' he says.
Merricks has come up with a more unusual suggestion - UK Mortgages is an investment trust that was only launched a year ago.
It invests in a diversified portfolio of UK residential mortgages and pays a yield of 6.5 per cent. Merricks believes that the managers at Twenty Four Asset Management who run this trust are a safe pair of hands.
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