Investment trusts can be a perfect means of acquiring diversified stock market exposure at a low rate. We can also be a perfect way to gain access to niche places on the market.
Personally, I have a number of investment trusts in my equity portfolio. Here's a peek at the two that I'm hoping to apply to in the near future when the stock market is down.
Scottish Mortgage investment company
One trust I hold in high regard is Scottish Mortgage investment company (LSE: SMT). this is often a worldwide equity product (it has nothing to try to to with Scottish mortgages) that’s managed by a team of top stock pickers at investment management firm Baillie Gifford.
What i prefer about SMT is its strong specialise in technology. More specifically, there’s attention on innovative tech companies that are disrupting established business practices. We don’t have tons of those sorts of companies here within the UK (the FTSE 100 barely has any technology), so this trust provides investors with something different. Top holdings at the top of February were Tesla, Amazon, Alibaba, Tencent, and Illumina.
Performance here in recent years has been excellent . For the five years to the top of February, the trust’s NAV rose 144% versus 63% for its benchmark, the FTSE All World Index (GBP). I’ll also means the trust has delayed alright within the recent stock exchange crash. Currently, its share price is at an equivalent level because it was three months ago. against this , the FTSE 100 index is down 25% over an equivalent period.
Overall, there’s tons i prefer about Scottish Mortgage. With a coffee annual fee of just 0.37%, i feel it’s an excellent trust to have for technology exposure.
Smithson investment company
Another investment company I’m getting to increase within the near future is Smithson (LSE: SSON). this is often a worldwide equity product offered by the team at Fundsmith. Launched in 2018, it's performed alright thus far .
What i prefer about this particular trust is that it's attention on small- and mid-sized companies (by global standards). this suggests , again, it can provide UK investors with something a touch bit different. You’re not getting to find S&P 500 giants like Apple and Amazon during this trust. Instead, the highest five holdings at the top of February were Verisk Analytics, Rightmove, Equifax, Masimo, and Check Point.
Another reason i prefer Smithson is that, like its big brother Fundsmith Equity, there’s a robust specialise in high-quality companies with financial strength and superior operating numbers. This approach should pay off within the current environment. Additionally, the team at Fundsmith are long-term investors, which I see as another plus.
Between its inception in October 2018 and therefore the end of February 2020, Smithson’s NAV rose 19.9%. against this , its benchmark, the MSCI World SMID Index, rose just 3.4%. That’s an honest outperformance. Annual charges aren't rock bottom around, at 0.90%, but i think the fee is worthwhile .
Overall, I see SSON as an excellent choice for risk-tolerant investors.
Shadrach is a Trending Journalist. His first job was as a newsreader and journalist at an award winning magazine. He spends most of his time scouring the internet for the hottest topics to share with his readers.