Top 10 investment trust winners in 2019
It’s been a good year for bold and brave investors, as our round-up of the best-performing trusts shows.
24th December 2019 11:23
by Kyle Caldwell from interactive investor
It’s been a good year for bold and brave investors, as our round-up of the best-performing trusts shows.
It would have required a contrarian mindset, but those who backed the most unloved part of the loathed UK market at the start of the year have enjoyed a prosperous 2019.
Four smaller-company focused trusts have won a place in the top 10 best investment trust performers of 2019. In addition two other high-fliers, Mercantile (LSE:MRC) and BlackRock Throgmorton Trust (LSE:THRG), also have exposure to smaller companies, although both trusts also back medium-sized businesses.
The dominance of UK smaller company trusts in the top 10 may come as a surprise. For a couple of years the UK market has been deeply out of favour, with heavy selling from both domestic and international investors. Brexit uncertainty was the big elephant in the room, with many investors waiting for clarity on how Britain’s future relationship with the European Union will pan out.
The general election and a Conservative majority made the picture clearer, as it eliminated the prospect of another referendum or remaining in the EU. This was widely viewed as the catalyst investors needed to back the UK market.
As the figures show, smaller-company focused trusts were favoured by some investors: they have achieved strong net asset value growth and even higher share price returns as discounts have narrowed considerably. The most canny of investors made their move well in advance of the general election, and were rewarded for doing so.
The share price total return figures shown (which strip out specialist trusts that are more institutionally focused) were compiled using FE Analytics from 1 January 2019 to the market close on 16 December 2019.
The top performer was JPM UK Smaller Companies investment trust, which gained 62%. It was trading on a discount of 12% at the start of the year, which has narrowed to 2.5%. It was a similar story for the JP Morgan-managed Mercantile investment trust. Its discount narrowed from 11.2% to 1.2%, which gave its share price a boost to return 56%. For BlackRock Throgmorton trust the same pattern played out, although to a lesser extent, with its 2.2% discount at the start of 2019 turning into a 3% premium.
- FTSE 100 stocks: Winners and losers in 2019
- FTSE 250 stocks: Winners and losers in 2019
- The best and worst performing funds of 2019
Experts, including Ben Yearsley, a director at Shore Financial Planning, are bullish on the outlook for UK-focused investment trusts, including those that operate in the smaller company arena.
Yearsley says:
“It doesn’t really matter what metric you look at the UK market on, it is cheap. International investors have abandoned the UK over the last few years, resulting in the current cheapness of the market, which (following the general election result) should narrow sharply over the coming months.”
Elsewhere, a strong year for gold helped New City Investment Managers’ Golden Prospect Precious Metal (LSE:GPM) win its place in the top 10, while Russia’s return to form was music to the ears of investors in JPMorgan Russian Securities (LSE:JRS).
Top 10 trust performers
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.
This article was originally published in our sister magazine Money Observer, which ceased publication in August 2020.
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.
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.