Our columnist reveals the investment trusts that have turned £1,000 into £10,000 or more since 9/11.
Now several stock markets are trading at or near all-time highs, many investors suffer bouts of vertigo when we see how far share prices could fall from here.
However, this week’s 20th anniversary of terrorist attacks on the World Trade Center should remind us that there have always been reasons to be fearful - and yet no fewer than 42 investment trusts have become ‘ten-baggers’ by turning £1,000 into £10,000 or more since then.
I should know because I am a long-term shareholder in three of them. Now, for the first time, interactive investor is publishing the full list of all 42 trusts that became ten-baggers since 9/11, according to Morningstar via the Association of Investment Companies (AIC).
What the data demonstrates is that investors who do not panic by selling into short-term setbacks can achieve good returns despite bad times. Bear in mind this period also includes the global financial crisis, which began in 2008, and the continuing coronavirus pandemic - not to mention little local trade spats, such as Britain’s exit from the European Union.
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Three big trends emerge from the table of total returns. First, Asia and emerging markets are the focus of no fewer than 17 trusts among the 42 ten-baggers. Second, smaller and unlisted companies often deliver bigger returns and account for 16 of the 42 winners. Third, although more difficult to identify in trust names or sectors, new technology has created substantial wealth out of thin air for many investment trust shareholders.
For example, the top ten-bagger overall combines all three themes — Asia, smaller and unlisted companies plus new technology — to reward shareholders in Scottish Mortgage (LSE: SMT) with a current value of £28,786 on £1,000 invested on 9/11.
The same fund manager, Edinburgh-based Baillie Gifford, also runs the second-best performer, Pacific Horizon (LSE: PHI), which turned £1,000 into £27,080.
Ranking third is Aberdeen Standard Asia Focus (LSE: AAS), with £21,372.
Sad to say, I missed all these top performers but am happy to have owned shares in three of Morningstar’s ten-baggers for most, if not all, of the past two decades.
Polar Capital Technology (LSE: PCT) turned £1,000 into £14,274; JPMorgan Indian (LSE: JII) grew the same sum into £12,882; while Baillie Gifford Shin Nippon (LSE: BGS) delivered £10,021 during this period. I first invested in JII in 1996 with PCT and BGS following in the early Noughties; PCT remains one of my top 10 holdings by value.
The 42 ten-baggers over the past two decades
|Company name||AIC sector||Ticker||Share Price Total Return from £1k lump sum (£)|
|Pacific Horizon||Asia Pacific||PHI||27,080|
|Aberdeen Standard Asia Focus||Asia Pacific Smaller Companies||AAS||21,372|
|BlackRock Throgmorton Trust||UK Smaller Companies||THRG||18,469|
|BlackRock Smaller Companies||UK Smaller Companies||BRSC||18,098|
|JPMorgan European Discovery||European Smaller Companies||JEDT||16,766|
|Scottish Oriental Smaller Companies||Asia Pacific Smaller Companies||SST||16,206|
|TR Property||Property Securities||TRY||15,589|
|JPMorgan Emerging Markets||Global Emerging Markets||JMG||15,466|
|JPMorgan Russian Securities||Country Specialist||JRS||15,372|
|Aberdeen New Thai||Country Specialist||ANW||15,163|
|JPMorgan China Growth & Income||China / Greater China||JCGI||15,162|
|Montanaro European Smaller||European Smaller Companies||MTE||14,723|
|Schroder AsiaPacific||Asia Pacific||SDP||14,571|
|Polar Capital Technology||Technology & Media||PCT||14,274|
|Canadian General Investments||North America||CGI||14,118|
|Aberdeen New Dawn||Asia Pacific||ABD||13,082|
|JPMorgan Smaller Companies||UK Smaller Companies||JMI||12,669|
|Electra Private Equity||Private Equity||ELTA||12,643|
|Invesco Perpetual UK Smaller||UK Smaller Companies||IPU||12,559|
|TR European Growth||European Smaller Companies||TRG||12,506|
|Templeton Emerging Markets||Global Emerging Markets||TEM||12,358|
|BlackRock World Mining||Commodities & Natural Resources||BRWM||12,180|
|Genesis Emerging Markets||Global Emerging Markets||GSS||12,034|
|Oryx International Growth||UK Smaller Companies||OIG||12,031|
|Invesco Asia||Asia Pacific Equity Income||IAT||11,763|
|Schroder Asian Total Return||Asia Pacific||ATR||11,749|
|Fidelity Asian Values||Asia Pacific Smaller Companies||FAS||11,528|
|Allianz Technology||Technology & Media||ATT||10,864|
|Rights & Issues||UK Smaller Companies||RIII||10,723|
|Pacific Assets||Asia Pacific||PAC||10,676|
|Henderson Smaller Companies||UK Smaller Companies||HSL||10,643|
|BMO Global Smaller Companies||Global Smaller Companies||BGSC||10,619|
|Asia Dragon||Asia Pacific||DGN||10,532|
|Edinburgh Worldwide||Global Smaller Companies||EWI||10,443|
|European Assets||European Smaller Companies||EAT||10,385|
|Biotech Growth||Biotechnology & Healthcare||BIOG||10,246|
|Baillie Gifford Shin Nippon||Japanese Smaller Companies||BGS||10,021|
Source: Source: AIC/Morningstar. Data from 11 September 2001 to 18 August 2021.
Better still for income-seekers, the AIC/Morningstar research also identifies no fewer than 37 investment trusts that have managed to maintain or increase their dividends every year during those two difficult decades. That number is much higher than the total of AIC ‘dividend heroes’ because the latter group only includes trusts that increased shareholders’ income throughout the same period.
British funds feature prominently among what I will call the 37 ‘sustainable dividend stalwarts’ or SDS than they do in the total return ten-baggers. The 37 SDS trusts include 11 from the AIC’s UK Equity Income sector and another six UK Smaller Companies.
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Investors seeking a track record of 20 years sustained dividends but who continue to see total returns as the decisive criterion for stock selection would find SMT at the top of their list again. This remarkable trust maintained dividend distributions throughout these two difficult decades as well as delivering the highest total return, although its initial yield today is a meagre 0.25%.
Second and third positions on that basis are held by two UK Smaller Companies funds; BlackRock Throgmorton (LSE: THRG) and BlackRock Smaller Companies (LSE: BRSC), which yield 1% and 1.6% respectively and delivered total returns of £18,469 and £18,098 on £1,000 invested on 9/11.
Of course, the past is not necessarily a guide to the future, although it does provide a factual basis for us to consider what might happen next. Dozens of investment trusts have demonstrated the ability to deliver good returns in bad times, both in the form of capital growth and sustained dividends, despite all the shocks and setbacks of the last two decades. So, while there are many reasons to be fearful, this DIY investor intends to remain cautiously cheerful.
Ian Cowie is a shareholder in Baillie Gifford Shin Nippon, Polar Capital Technology and JPMorgan Indian as part of a globally diversified portfolio of investment trusts and other shares.
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.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.