Interactive Investor

Financial advisers name their favourite investment trusts

15th March 2022 12:18

Sam Benstead from interactive investor

From technology trusts to income stalwarts, these are some of the best funds for different investment horizons.

The 5 April deadline to use the £20,000 annual ISA allowance is fast approaching, making now a great time to review and add to portfolios.

Investment trusts are a favourite for ISA investors as their structure means they can save up income for a rainy day, borrow to increases returns and have a fixed pool of assets – meaning the fund manager does not have to sell stocks to meet investor redemptions.

But with more than 300 to choose from, where should an investor start? These are some of the best options for different age groups, according to financial advisers.


Aged between 26 and 40, millennials have the luxury of a long investment horizon if they are putting away cash for retirement.

This means they can take more risk, such as by owning investment trusts that buy fast-growing technology stocks or smaller companies.

Paul Chilver, associate and financial planning manager at Birkett Long, says Montanaro European Smaller Companies (LSE:MTE), which focuses on the pricey but more promising section of smaller companies, is a strong option for millennials. The trust has an impressive track record, returning 50 percentage points more than rivals over the past decade.  

For those with a higher risk tolerance and long investment horizon, Genevra Banszky von Ambroz, partner at Tilney Smith & Williamson, recommends the Ashoka India Equity (LSE:AIE) and VH Global Sustainable Energy Opportunities (LSE:GSEO).

She said: “The former is a mid- and small-cap Indian equity trust, and the latter, which was launched this time last year, focuses on delivering a diversified portfolio of sustainable energy infrastructure investments which support the UN Sustainable Development Goals and the energy transition.”

Edinburgh Worldwide (LSE:EWI) was also favoured, despite seeing its share price falling notably over the past year, down 44%. The Baillie Gifford managed trust buys exciting but risky small company stocks from around the world. Banszky von Ambroz says for those with a long investment runway its recent poor run of form gives investors the opportunity to potentially ‘buy low’. 

Monks (LSE:MNKS), also managed by Scottish fund group Baillie Gifford, is a top pick for Neil Mumford, chartered financial planner at Milestone Wealth Management. He said: “The trust aims for long-term growth which takes priority over income by applying a patient approach to investment.

“The current savage market rotation from quality growth to value has seen this trust sink to a one-year negative return of minus 25% and a very rare discount, currently 9%. This has not affected its impressive long run performance of 210% gains over 10 years.”

Middle-aged investors

Savers in their peak earning years but with one eye on retirement are better served by trusts that buy more mature companies and return some of their earnings to shareholders.

For Philippa Maffioli, senior adviser at Blyth-Richmond Investment Managers, this makes Brunner (LSE:BUT) a good fit.

Maffioli said: “The managers favour large, well-financed businesses with strong opportunities for growth and reliable dividends. This investment trust is a dividend hero and has consistently increased its dividend for 50 years.”

Banszky von Ambroz also backs the income theme, suggesting that middle-age investors look at Diverse Income Trust (LSE:DIVI)and Finsbury Growth & Income (LSE:FGT).

“Generally, one would expect middle-aged investors to have a lower tolerance for risk than millennials so they will be thinking much more carefully about saving for retirement. These trusts will generate good long-term returns for clients, while also delivering an income.”

Chilver adds that Mercantile (LSE:MRC) and Scottish American (LSE:SAIN) are good options.

“Mercantile Investment Trust, managed by JPMorgan, is a UK all companies investment trust, which currently looks attractive due to its 10% discount.

“Scottish American Investment Company, more widely known as SAINTS, looks to pay a regular dividend. This trust has a global approach and is one I personally like.” Its largest holdings include Microsoft (NASDAQ:MSFT) and PepsiCo (NASDAQ:PEP).


Without an employment income, older investors will probably be most interested in trusts that provide a reliable income stream but lower share price volatility.

Banszky von Ambroz recommends International Public Partnerships (LSE:INPP), which owns a diversified portfolio of social infrastructure assets, and RIT Capital Partners (LSE:RCP), a diversified, international multi-asset fund that looks after the wealth of the Rothschild banking dynasty.

Mumford says retirees are also after share price growth as well as income. One trust that delivers on both, he argues, is Bankers (LSE:BNKR).

He said: “This trust has the flexibility to invest in any geographic region with no set limits on country or sector exposure. The manager leverages off the expertise of six regional managers whose focus is on cash generative and dividend-paying companies. The trust currently yields over 2%, and more importantly aims to increase this by inflation.”

Maffioli backs Law Debenture Corporation (LSE:LWDB), whose managers James Henderson and Laura Foll focus on out-of-favour stocks at discounts to their long-term historical average.

She says: “I believe that the managers are capable of pinpointing stocks which are good quality and have a competitive advantage. The current yield of almost 4% is obviously attractive to retirees looking for income with the possibility of growth as well.”

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

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