Our columnist notes that there were a couple of pleasant surprises and a standout stinker, as he names all his holdings.
As part of a new series, I intend to review the share price total return performance of my ‘forever fund’ investment trusts on a quarterly basis. As always, the intention is not to brag or suggest that I am doing better than anyone else but merely to report the personal experience of one DIY investor, seeking to avoid poverty in old age by means of a diversified portfolio of investment companies and other shares.
The full list of my holdings can be found at the bottom of this article.
During 2021’s second quarter (Q2) the average investment trust, excluding venture capital trusts (VCTs), delivered a total return of 6.5%, according to Morningstar via the Association of Investment Companies (AIC). The first half-year (H1) return was 7.6%, the one-year return was 31% and the five-year return was 97% on the same basis. I am grateful to the AIC for providing all the statistics in this article, bar one as explained below.
Five failures blighted my forever fund during the three months to the end of June. Schroder UK Public Private Trust (LSE:SUPP) was the standout stinker, shrinking by 9.6% during Q2. More surprisingly, this UK ‘growth capital’ AIC sector trust formerly known as Woodford Patient Capital, delivered a positive return of 7.9% H1 and 31% over the last year, but plunged by 60% over the last five years. Oh well, I went in on a 10-year basis and intend to see this through.
Most surprisingly, Baillie Gifford Shin Nippon (LSE:BGS), a long-term star performer in my portfolio, was the next worst; shrinking 3.4% in Q2 and languishing 14% down in H1. The one-year return is up 19% and the five-year figure remains a satisfactory 104%. Even a good trust, like this Japanese smaller companies specialist, can go through a bad patch but I intend to watch BGS more closely.
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International Biotechnology Trust (LSE:IBT) was third worst, falling 1.5% in Q2; 11% in H1 and 2% over the year. However, the five-year return remains up 90%. Volatility is no surprise in this sector, which I expect to remain in strong demand as viruses mutate and new vaccines are sought.
US Solar Fund (LSE:USF) was fourth most feeble with share price shrinkage of 0.8% in the last quarter; -4.5% H1 and -0.3% over the year. This newish trust remains under a cloud as it struggles to reach its 5.5% target yield, but the dividend it delivered last week suggests it may do so later this year.
JPMorgan US Smaller Companies (LSE:JUSC) is another somewhat disappointing surprise. It is the fifth of my five worst performers during Q2 with a negative return of 0.6%. But such a modest short-term setback is no reason to panic when this long-term favourite advanced 7.8% H1; surged by 45% over the last year and soared by 139% over the last five years. If you can’t live with ‘failure’ like that, you should avoid the stock market.
After the pain, here comes the pleasure. Vietnam Enterprise Investments Limited (LSE:VEIL) spiced things up with positive returns of 17% during Q2; 28% H1 and a sparkling 68% over the last year.
Morningstar via the AIC does not yet have a five-year figure for this trust. But the managers, Dragon Capital, celebrated its fifth birthday on the London Stock Exchange earlier this month and claim to have generated 193% over the period. As discussed here last week, this shareholder believes there is further to go.
Closer to home, JPMorgan Mid Cap (LSE:JMF), the self-descriptive UK fund, ranked second with a 15% return during Q2; 25% H1; 65% over the last year and 95% over the last five years. As demonstrated by multiple bids for Morrisons (LSE:MRW), Britain’s fourth biggest supermarket, international investors are finding value in the UK as Brexit fears subside and business gets back to something resembling normality.
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More surprisingly, BlackRock Latin American (LSE:BRLA) was the third-best performer among my investment companies with a 13% return during Q2; 4% H1; 27% over the last year and 41% over the last five years. Maybe patience is beginning to pay off in Brazil.
Northern 2 VCT (LSE:NTV) was another pleasant surprise with positive returns of just over 11% in Q2; 14% H1; 52% over one year and 42% over five years. To be candid, I had tended to overlook my VCTs after their initial 30% income tax relief and it is good to see this share price moving in the right direction at last.
Aberdeen Standard European Logistics Income (LSE:ASLI) ranked fifth among my flourishing five with a return just under 11% in Q2; 12% H1 and 19% over the last year. But the main attraction of this warehouse fund serving online retail is a running yield of 4.4% for those of us who subscribed at the initial public offer (IPO) in December 2017.
So this quarterly review has produced several surprises about short and medium-term winners and losers. It won’t prompt any major change in strategy but will inform which shares require more careful scrutiny and where to reinvest dividend income.
Ian Cowie’s ‘forever fund’
This is a complete list of Ian Cowie’s stock market investments at 30 June 2021. It is not financial advice nor is any recommendation implied. Share prices can fall without warning and you might get back less than you invest.
Chapel Down Group
Novo Nordisk (NYSE:NOVO)
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.
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.