Ian Cowie: how 15 trusts I own have fared since Covid-19 sell-off

by Ian Cowie from interactive investor |

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Our columnist reviews the performance of his portfolio of investment trusts since the market bottomed on 23 March. 

In the same way that bad times help us find out who our good friends are, the coronavirus crisis is separating high-quality investments from speculative dross. So, just over six months since the stock market’s 2020 low point in the pandemic panic, it is interesting to see how investment trusts have shielded shareholders from the worst of the crisis - and proved a great comfort to this DIY investor.

Research from independent statisticians Morningstar, exclusively commissioned for interactive investor, shows that while the FTSE 100 index of Britain’s biggest shares has bounced back by 16% since this benchmark’s nadir on March 23, and the FTSE All Share index - a broader measure of the British market - has risen by 19%, the average investment trust has soared by 41%.

Spare a thought for the smart alecs back then who sagely predicted worse to come - as they always do - and sold up after share prices had hit the bottom. Perennial pessimism is the easiest way to simulate wisdom about stock markets but it ain’t the way to make money.

On a brighter note, it is interesting to see how my modest portfolio of investment trusts has fared during the storm so far. Perhaps surprisingly, Baillie Gifford Shin Nippon (LSE:BGS), a Japanese smaller companies specialist, is the star of the show. The shares have delivered a total return of 98% since markets bottomed in March.

JPMorgan Japan Smaller Companies (LSE:JPS) ranks second in my global portfolio with a total return of 81% over the same period. Interestingly, JPS yields dividend income of 3.5% while BGS pays none.

So the gap between the two may illustrate how the price of a high income today (remember that base rate is 0.1%) may be lower total returns tomorrow. But I am certainly not complaining about either of these trusts.

Less surprisingly, Polar Capital Technology (LSE:PCT) is having a “good crisis” as we spend more time and money online, with a total return of 71% since March.

Similarly, it is an ill wind that blows no good with International Biotechnology (LSE:IBT) and Worldwide Healthcare (LSE:WWH) both benefiting from the search for a coronavirus cure; rising by 69% and 53% respectively.

Aberdeen Standard European Logistics (LSE:ASLI), the continental warehouse owner, is enjoying the boom in shopping online and has delivered a total return of 47%.

JPMorgan US Smaller Companies (LSE:JUSC) is another big winner with a 46% gain. Pundits may fret about the presidential election on 3 November, but many companies are getting back to something resembling business as usual.

Ecofin Global Utilities & Infrastructure (LSE:EGL) shows how it is possible to do well by doing good with a total return of 39% and a dividend yield of 3.7%.

Even Schroder UK Public Private Trust (LSE:SUPP), long a dog of my portfolio, has perked up by 34%. Vietnam Enterprise (LSE:VEIL) is next with 31%, followed by JPMorgan Indian (LSE:JII) with 27%, and Jupiter Emerging & Frontier Income (LSE:JEFI) with 22%.

My three laggards in the great stock-market bounceback of 2020 are Henderson Far East Income (LSE:HFEL) with a total return of 19%; BlackRock Latin American (LSE:BRLA) with 17%, and Rights & Issues (LSE:RIII) with 12%. Even so, I am not sure “laggards” is quite the right word when they have delivered double-digit returns in less than seven months.

Annabel Brodie-Smith, communications director at the Association of Investment Companies (AIC), told me:

“Despite heightened market volatility and economic uncertainty caused by the coronavirus pandemic, it is encouraging to see the average investment company’s performance is in positive territory in the year to date, up 3% so far in 2020.”

Brodie-Smith points out this is reassuring when the FTSE 100 and FTSE All-Share are both languishing, down by 19% and 18% over the same period.

She adds:

“This striking difference can be explained by investment companies’ global diversification and their ability to invest in robust income-producing alternative assets like infrastructure. Investment companies can invest all around the world and this freedom is important now, as our home market is suffering due to large parts of the UK being back under some form of lockdown and doubts about the likelihood of a Brexit deal.”

Brodie-Smith’s words of wisdom remind investors that we aren’t out of the woods yet and there may be worse to come in 2021. Even so, investment trust shareholders will continue to enjoy the structural advantages of investment trusts - including, most topically, not being forced to sell assets when short-term speculators panic. Here and now, investment trusts have delivered wonderful returns despite terrible times for many other shareholders in 2020.

Ian Cowie owns shares in Aberdeen Standard European Logistics (LSE:ASLI); Baillie Gifford Shin Nippon (LSE:BGS); BlackRock Latin American (LSE:BRLA); Ecofin Global Utilities & Infrastructure (LSE:EGL) International Biotechnology (LSE:IBT); JPMorgan Indian (LSE:JII); JPMorgan Japan Smaller Companies (LSE:JPS); JPMorgan US Smaller Companies (LSE:JUSC); Jupiter Emerging & Frontier Income (LSE:JEFI); Henderson Far East Income (LSE:HFEL); Polar Capital Technology (LSE:PCT); Rights & Issues (LSE:RIII); Schroder UK Public Private (LSE:SUPP); Vietnam Enterprise (LSE:VEIL) and Worldwide Healthcare (LSE:WWH) as part of a globally-diversified portfolio.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

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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