Interactive Investor

Investment trust winners and losers in 2021

22nd December 2021 08:46

Hannah Smith from interactive investor

Trusts that focus on backing private companies are among the best performers. At the other end of the table, it was a tough year for biotech specialists.

As another dramatic year comes to a close, commodities and private equity portfolios led the winners in the closed-ended fund space. Here, we take a look at the best- and worst-performing investment trusts from across the Association of Investment Companies (AIC) sectors in 2021.

The leaders

In a year where growth stocks have once again had a strong run, a trust managed by growth investing house Baillie Gifford tops the performance tables. Baillie Gifford Schiehallion (LSE:MNTN) gained an impressive 114% in share price total return terms over the year to 9 December – all other figures. It focuses on private companies in a later stage of growth that have the potential to become listed businesses.

A couple of other private equity trusts also feature in the winners’ list this year – BMO Private Equity (LSE:BPET) trust has returned 65% to investors in 2021, while Neuberger Berman’s Private Equity Partners (LSE:NBPE) trust has delivered 62%. “With private equity you’re just at a sweet spot in the cycle,” says Charlotte Cuthbertson, assistant fund manager at Premier Miton. “There’s $1 trillion of assets looking for a home in that area.”

Second in the rankings is New City Investment Managers’ Geiger Counter (LSE:GCL), an investment trust investing in nuclear power with a particular focus on small- and mid-cap companies in the space. The sector is currently benefiting from a lack of supply which is pushing up uranium prices, while demand is likely to increase from China and India building new nuclear reactors in a bid to improve air quality.

Cuthbertson owns Geiger Counter in her portfolios at Premier Miton. “It has performed well this year because there has been such a focus on getting economies to net carbon zero, and there has been a wider acceptance that nuclear will have to be part of the energy mix,” she said. “The price of uranium has moved up sharply this year and, while there is volatility, we think there’s further to go on this one.”

​​​​​Vietnam has been a very strong market this year, with the Vietnam Ho Chi Minh index up 34% year-to-date as the nation has benefited from regulatory and supply chain disruption in China and investors redirecting their capital in response. VietNam Holding (LSE:VNH) is one trust focused on the region, returning 85% in 2021. The trust’s manager Craig Martin said it has been “a standout year”.

“Domestic investors have driven the stock market to record highs on the back of surging levels of liquidity. We are excited by the prospects for 2022 as Vietnam gets back to its multi-decade GDP growth trajectory of 6% to 7% per annum,” he added.

Against a backdrop of global trade grinding to a halt in the face of the pandemic, you might not expect a trust connected to the shipping industry to perform well, but Tufton Oceanic Assets (LSE:SHIP), which leases ships, was a top 10 performer this year. “What happened is over the past year you’ve seen charter rates going through the roof – it used to be $2,000 a container from China to the US, and at one point it touched $25,000,” explains Cuthbertson, noting that a ship also got stuck in the Suez Canal in March, blocking huge volumes of trade. “We could see that most of Tufton’s ships run reasonably long charters so they were going to be fine and then they could reap the rewards of the fact the supply was just not there.”  

Top 10 overall investment trusts of 2021

All data from 1 Jan 2021 to 9 December 2021. Source: FE Analytics. Unclassified sector and Venture Capital Trust sectors excluded. 

The laggards

At the bottom of the table is Electra Partners’ Electra Private Equity (LSE:ELTA) trust, which is currently being wound down and money returned to shareholders. Aircraft leasing trust DP Aircraft (LSE:DPA) also took a significant hit as travellers stayed home and airlines struggled to make money.

A couple of biotech trusts made the bottom 10 list for 2021 – Biotech Growth (LSE:BIOG) and Syncona (LSE:SYNC) were down 25% and 26% respectively. Having bought Biotech Growth in 2020 and later taking profits, Cuthbertson and her team are buying back into the trust now while it is looking cheap, in the view that the falls look overdone.

Aberdeen’s CEIBA trust, a niche portfolio focusing on property and other real assets in Cuba, also had a torrid year, down 24% in share price total return terms.  

Baillie Gifford China Growth Trust (LSE:BGCG) struggled as investors ditched China in the face of increasing state interference in sectors such as education, gambling and technology. Another trust affected by this is Sniper Capital’s Macau Property Opportunities (LSE:MPO), which owns high-end apartments in Macau.

“We own this trust and it has had continual headwinds over the last five years or so, most recently people have been very nervous about the Chinese government’s influence – for example, they are very controlling of the property sector and don’t want people to be able to take their money out of China, so there are a lot of property restrictions” says Cuthbertson.

“More recently the government has been more controlling over gambling – long term it wants to wean Macau off gambling and move it into being more of a financial centre. This interference has put a lot of pressure on casino stocks.”

Elsewhere in the bottom 10 are two natural resources funds: New City Investment Managers’ Golden Prospect Precious Metal (LSE:GPM), and RDP Global Resources.

Bottom 10 overall investment trusts of 2021

Electra Private Equity (LSE:ELTA) -76.2
DP Aircraft (LSE:DPA) -74.1
KKV Secured Income PLC TR in GB -51.1
RDP Global Resources Investment Trust PLC Ord 1P TR in GB -43.6
Syncona (LSE:SYNC) -26.1
Biotech Growth (LSE:BIOG) -24.9
Aberdeen Fund Managers Ltd CEIBA Investments Limited TR in GB -24.3
Macau Property Opportunities (LSE:MPO) -23.1
Golden Prospect Precious Metal (LSE:GPM) -22.9
Baillie Gifford China Growth Trust (LSE:BGCG)  -22.7

All data from 1 Jan 2021 to 9 December 2021. Source: FE Analytics. Unclassified sector and Venture Capital Trust sectors excluded. 

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