These awards focus on trusts that have best rewarded investors contributing monthly over five years – long enough to iron out the up and downs in a trust’s share price compared with its net asset value.
Global generalist trusts
Contenders: Trusts from the global and global equity income sectors with at least 70 per cent of assets invested outside the UK
In taking this award for a fifth consecutive year, Scottish Mortgage has achieved outstanding returns from a high-conviction, internationally diversified portfolio of companies that its managers, James Anderson and Tom Slater, expect to be world-beaters in their sectors, including a number not yet quoted. Its costs are low, it seeks to keep its share price close to NAV and it makes active use of gearing.
Anderson and Slater are exceptionally bold long-term investors. They were well-served during the period under review by their high weightings in US and Chinese technology-enabled companies, notably Amazon, Tencent, Alibaba and Illumina. Their style will not always be in favour, but believers who buy steadily through the dips could be well-rewarded.
A consistent top performer with highly competitive charges.
A strong, low-cost global income choice, yielding close to 4 per cent.
Each chart shows the value of £50 contributed monthly (£3,000 in total)
Contenders: Trusts from the UK all companies, UK equity income and UK smaller companies sectors
Medium and smaller-company trusts outperformed their larger company oriented rivals in the UK over the past five years, and dominate this awards category. Standard Life UK Smaller Companies trust has been managed by Harry Nimmo since 2003 and has performed strongly over 10 as well as five years, despite relatively high ongoing charges.
Nimmo’s well-honed, research-intensive investment process recognises that different types of company perform well at different times in the economic cycle, so the portfolio is actively managed, as is gearing. The portfolio is comprised of Nimmo’s 60 or so highest-conviction ideas. Its exposure to Aim-listed shares has grown to around 46 per cent as the choice and quality of Aim companies has improved. Exposure to firms deriving more than half their earnings from overseas was ramped up in 2017.
Consistently ranks in the top three in its AIC sector over most timeframes.
An attractive yield of 3.5 per cent helps keep the discount relatively narrow.
Overseas developed markets
Contenders: Trusts from the North America, Europe and Japan sectors
JPMorgan Japanese investment trust targets capital growth from a high-conviction portfolio of Japanese companies with strong structural growth prospects, competitive positions in their sectors, strong balance sheets and cash flows, and good corporate governance.
The trust substantially outperformed its benchmark, the Topix index, over the five years to the end of January. Tokyo based manager Nicholas Weindling says JPMorgan’s experienced team of 24 locally based investment professionals is a big advantage in Japan’s sparsely analysed market. The trust makes active use of gearing. Its charges are the lowest in its sector, and its shares generally trade at an above average discount.
A steady performer returning 200 per cent plus over the last 10 years.
Strong performance in a region where it is notoriously hard to beat the index.
Overseas smaller companies
Contenders: All overseas trusts with a primary focus on smaller companies
Baillie Gifford Shin Nippon’s performance has not faltered since Praveen Kumar succeeded John MacDougall as manager in December 2015. It has continued to pull well ahead of the buoyant Japanese smaller company indices, and it takes this award for the fourth year running.
Like his predecessor, Kumar focuses on a portfolio of around 70 genuinely smaller firms with exciting growth prospects – due to their innovative or disruptive business models or overseas growth opportunities – which he expects to hold for at least five years.
Portfolio themes include the expansion of tourism; specialist staffing companies to cope with perennial labour shortages; factory automation, where Japan is a world leader; and healthcare, incorporating the search for regenerative medicines. The trust’s ongoing costs have been trimmed to less than 1 per cent, and the board tries to control the premium, currently around 8 per cent, through new issues.
This trust has more than doubled regular savers’ money since 2013.
A relatively high discount offers potential for share price gains.
Contenders: Trusts with the bulk of their assets invested in global emerging markets
Pacific Horizon, another Baillie Gifford-managed trust to claim a gold regular savings award, has a high conviction, growth-oriented portfolio, is geared and has been trimming its charges. Ewan Markson-Brown has been manager since March 2014, but the trust did not pull significantly ahead of its benchmark until 2017, when its success was powered by substantial gains from holdings in South Korea, Vietnam and Hong Kong/China.
The central theme of the portfolio is the onward march of technology in various guises, including automation, artificial intelligence, biotechnology and the ‘internet of things’. The underlying philosophy is that innovation beats stability and new businesses have an advantage over old ones.
Its immersive view of Asia has helped it top the sector over most timescales.
Performance has improved since the present manager took over.
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