Page 28 - DIY Investor Magazine - Issue 26

Eight of the top twenty trusts have a market cap in excess of £1bn; most of these have been around for at least a decade, and where they haven’t, you can trace their history back a bit further. Baillie Gifford US Growth joined the market in 2018 but is closely linked in style terms to the open-ended Baillie Gifford American fund, which is over twenty years old.
Pershing Square IPO’d in 2014 but existed as a limited company for a long time prior to that; Augmentum Fintech was another 2018 newbie but started life as a partnership in 2009 with RIT Capital Partners as the sole investor.
NOTABLE PERFORMERS
Even in sectors that have struggled, there have been some notable winners; Triple Point Social Housing REIT and Aberdeen Standard European Logistics Income in the property sector are both up 28%. RDLZ Realisation, a debt trust in the process of winding down, is up by the same amount.
Private equity trusts have seen their discounts widen this year with investors trying to get ahead of potential falls in their net asset values. But HgCapital has still been able to make headway, with its tech focus seeing its shares rise 21%.
Impax Environmental Markets, now valued at over £1bn, has had another good year, recording a 27% gain; although we have a rash of renewable energy infrastructure trusts, few managers seem to want to focus on equities in this area.
Emerging markets have had to play second fiddle to developed markets for a long time, but thanks to Asia’s good performance this year, they kept up pretty well; more established emerging market trusts have seen some nice increases and new-ish trusts have been among the best performers.
Fundsmith Emerging Equities is up 17% after its portfolio was streamlined and Terry Smith trimmed his involvement.
Mobius Investment Trust has risen 19% although that only takes its back to its IPO price of late 2018.
Nick Train has had a difficult year, by his own admission and by his very high historical standards; Lindsell Train Investment Trust is up 12% with its 10-year return slumping to a mere 620%. It’s still the fifth best-performing trust of the last decade. UK-focused Finsbury Growth & Income is down 2%.
THOSE WITH A YEAR TO FORGET
The two trusts previously run by Woodford protégé Mark Barnett have come back a bit under new management;
Perpetual Income & Growth, formally merged with Murray Income since I collected these numbers, was down 19%, Edinburgh Investment Trust, NOW RUN BY MAJEDIE, was 12% in the red.
The old Woodford Patient Capital Trust, now Schroder UK Public Private, briefly recovered at the end of 2019 but it’s down 28% this year and still sits at a 40%+ discount; it will be a while longer before we know whether this trust can turned around. Well-known UK equity income trust Temple Bar also changed manager this year; it is currently down around 35%, but was down 60% in March.
The three worst-performing trusts of 2020 have been propping up the performance tables for some time; JZ Capital Partners, an illogical mix of US property and micro-caps, has had difficulty with its sums and has fallen 72%. KKV Secured Loan, a high-yield leasing trust that providing plant and equipment to a wide range of industries, has fared even worse; changing both its name and manager, its shares have slumped 82%.
Worst of all, is aircraft leasing trust DP Aircraft I - it’s a tenth- bagger with a loss of 92%. It owns a single aircraft whereas other trusts of this type usually own several (other aircraft leasing trusts have fallen in price this year as well but not as dramatically).
IN SUMMARY
Many commentators have highlighted the fact that the pandemic has accelerated trends that were already underway, and that seems to be true for investment trusts as well.
The top 20 list for this year almost looks like one that covers
a five-year period, such are the size of the gains; I think 2021 could be an equally fascinating year for stock market nerds like myself. Can the tech titans and disruptors continue to forge ahead now that widespread vaccine relief could be just a few months away? Will the UK finally enjoy a long-overdue day in the sun once the final shape of Brexit is revealed?
And will we see beaten-down trust sectors rally due to waves of consolidation that narrow their discounts? All of the above could even be true but I think I’ll leave precise forecasts to other folks.
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