Winning with Investment Trusts!

Winning with Investment Trusts!

Investing in the Stock Market

Investing in the stock market can be a risky business. However, over the long term the performance has been good. For example, over the last year the FTSE is up 2.29% (August 2018) – not brilliant and hardly better than sticking your capital in a safe Bank Account. The picture is much more encouraging over 5 and 10 yrs at 17.42 and 54.20% respectively. Of course, we are restricting our view to UK listed companies and although many are multi-national the performance in other markets can be significantly better! Take for example the NASDAQ 100 in the USA – here the performance over 1, 5 and 10 yrs is much more impressive at 32.99, 155.98 and 240.83%.

Share Portfolio

Attribution: Stock Portfolio by Nick Youngson CC BY-SA 3.0 Alpha Stock Images

Experience tells me that I have limited knowledge and expertise in picking individual shares and therefore I should be leaving it to an experienced manager who performs well over an extended period. Investment Trusts invest in a portfolio of shares (or even other trusts). Pick a good manager/trust and over time your portfolio should perform well and in some cases will beat the indexes (FTSE, DOW, Nasdaq, etc.).

How to Choose an Investment Trust?

An investment trust is a listed company that invests in other companies, fixed income investments or unquoted shares which they expect to grow in value and generate revenue from dividends. Unlike other collective investments such as funds their shares are quoted on the London Stock Exchange and their price is determined by supply and demand. There are over 500 investment trusts to choose from through AJ Bell Youinvest. There are investment trusts in many different sectors offering both specialist and broader market coverage.

  • An easy way to diversify your portfolio
  • Choose from over 500 Investment trusts using our screener tool
  • Medium to long-term investment
  • Lower risk option than shares

Choosing a consistent Investment Trust

The table below shows the performance of Investment Trusts over various periods (sorted by performance over 10 years). Data comes from

Investment Trust Performance Table

Looking at these tables – there is a number of points to elaborate on. First many of these invest in Technology or BioTechnology sector:  PCT,  ATT, BIOG, WWH, and SMT (latter especially in FANGS). Perhaps it wise to spread your risk across various sectors – so choose one or possibly two technology-based trusts? Lindsell Train is on a premium valuation (share price significantly higher than the asset value) – so invest if you are prepared to accept the risk of a downward revaluation. AIF performance has been poor over the last year. A starting selection for a growth portfolio might include RECI, BGS, PCT, THRG and BRSC. For the more adventurous you might consider investing in individual stocks and shares – read our article: Share Investment Opportunities and Free Shares

For an income Investment Trust portfolio read this post: How to Live Well in Retirement? Income Portfolio!


Premium / Discount

At a premium is a phrase attached to a variety of situations where a current value or transactional value of an asset is above its fundamental value.

FE Risk score

FE Risk scores tell you how risky an investment is compared to the FTSE100. They do not show you how risky an investment is in absolute terms but are a useful means to compare potential investments with this most widely known index.


Alpha, used as a measure of performance, is the excess return of an investment relative to the return of a benchmark index.


Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole.

Related Posts


Retired from 1st for French Property - now enjoying my Senior Gap years!

Leave a Reply

Close Menu
%d bloggers like this: