Fund Focus: how have the one-stop-shop trusts held up?

The air is busy, once again, with warnings about the dangers of tracker funds. That they are too concentrated (and not diversified enough), that they are too momentum-addled, and that they buying into a market bubble. 

But investors have understandably backed the market via such funds over the years and will often reference them when assessing the performance of stock pickers.

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The bar is still pretty high on that front, with the MSCI World index returning around 20% over a year in sterling terms and the MSCI All Country World index, which has a modest allocation to rallying emerging markets, doing slightly better. 

Global equity managers will inevitably keep an eye on these markets – although in times of concentration and high valuations they might be unsurprised to underperform, for now.

Many well-known active global funds have a concentrated portfolio or a pretty distinctive approach, as with names like Fundsmith Equity I Acc (B41YBW7) and WS Blue Whale Growth I Sterling Acc (BD6PG56), and might not serve best as a core holding. 

But a handful of investment trusts, Bankers Ord (LSE:BNKR), F&C Investment Trust Ord (LSE:FCIT), Alliance Witan Ord (LSE:ALW) and Brunner Ord (LSE:BUT), look to act more as a one-stop shop. With more than half of 2026 behind us, it’s worth asking how they have performed as of late.

Scores on the doors

As the table shows, just one of these names, Bankers, has outpaced the MSCI World index over a 12-month period. 

It has certainly had lots of exposure to the artificial intelligence (AI) spending boom, with its results for the six months to the end of April noting that exposure to Micron Technology Inc (NASDAQ:MU), Applied Materials Inc (NASDAQ:AMAT), Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM), NVIDIA Corp (NASDAQ:NVDA), Broadcom Inc (NASDAQ:AVGO), Advanced Micro Devices Inc (NASDAQ:AMD) and Mediatek had all boosted performance. 

The portfolio also benefited from positions in energy names TotalEnergies SE (EURONEXT:TTE) and TC Energy Corp (TSE:TRP) as conflict erupted in the Middle East.

Source: FE Analytics. Past performance is not a guide to future performance.

Exposure to the names most associated with both market gains and bubble fears of recent years can be seen from the fund’s monthly factsheet. Top holding Nvidia makes up 5.8% of the fund, with Amazon.com Inc (NASDAQ:AMZN) on 4.3%, TSMC on 3.4%, Apple Inc (NASDAQ:AAPL) on 3.3% and Alphabet Inc Class A (NASDAQ:GOOGL) on 3.2%. Around two-thirds of the fund is in North America, with about 11% in Asia.

F&C, as we have discussed before, doesn’t stray too far from the global index in terms of what it holds, bar an 11% allocation to private equity. 

Around 55% of the fund is in North American equity, around 13% is in emerging markets and some of the usual suspects, from Magnificent Seven shares to TSMC and SK hynix Inc ADR (NASDAQ:SKHY), sit in its top holdings.

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The fund should in theory perform not too differently to the index, and it shouldn’t be surprising to see it lagging slightly right now. 

The hope is that it holds up better when markets struggle, and to its credit the trust’s shares fared much better in 2022, when they fell by around 1% versus an almost 8% loss for the MSCI World index. 

But investors might understandably want something more differentiated if they are going to pay for an active portfolio.

Strugglers

Alliance Witan has continued a slightly disappointing spell of returns, making around 7% over this 12-month spell. 

We spoke to the team late last year and they argued that a more risk-averse approach had punished the portfolio – for example because it didn’t hold unprofitable companies that had seen big share price rises. 

If that narrative holds true, it would benefit the trust if markets turned. Alliance Witan also has lots of household names among its top holdings, from TSMC to Magnificent Seven members and Samsung Electronics Co Ltd DR (LSE:SMSN). Asia now accounts for almost a fifth of the trust, reflecting the big turn in sentiment (and price rises) for the region in the last year.

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Brunner, which has a structural bias to UK shares and a much lower North America allocation than the rest, is sitting on similar 12-month returns to Alliance Witan. The fund also stands out by sector allocation, with some chunky exposures to industrials and financials.

The team has been quite withering, at times, about the direction of markets and the risk of investors getting carried away with the AI theme, and have exercised some caution on this front.

Take the latest factsheet where they note: “While we have significant investments in AI and semiconductors, we are underweight what is now an uncomfortably large part of the benchmark. 

“AI remains a young technology, and while we expect it to have a significant impact, it is unclear who will capture the benefits. We are unsure whether many of the companies currently in vogue have sustainable competitive advantages, or whether they will generate enough cash flow for shareholders to justify current valuations.”

Such attitudes, and attempts to diversify, could pay off if some of the current market leaders do suffer. But as is often the case with active funds, investors may well require some patience.