- With the end of the tax year (5 April) fast approaching, here are three investment trust ideas that investors could consider for this year’s Stocks and Shares ISA allowance.
- ISAs offer a way to shelter your investments from UK income and capital gains tax. It means you can make the most of your investments.
- The deadline to use this tax year’s ISA allowance is 5 April.
“Markets have been particularly volatile for a while now and it feels like the ups and downs are not going away anytime soon. During these periods it is important to remember that investment goals are usually long term in nature, meaning investors need to see through the short-term changes in value.
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ISAs are a great way to save for the long term and here we have three investment trusts that aren’t looking to make a ‘quick buck’ by timing the market gyrations, instead they focus trying to grow your investment over the long term.”
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Personal Assets Trust
“Personal Assets Trust manager Sebastian Lyon likes to keep things simple. He aims to shelter investors' wealth just as much as grow it. Rather than trying to shoot the lights out, the trust aims to grow investors' money steadily over the long run, while limiting losses when markets fall.
It tries to experience smaller ups and downs than the broader global stock market or a portfolio that's mainly invested in shares.
The trust is focused around four ‘pillars’. The first contains large, established companies Lyon thinks can grow sustainably over the long run, and withstand tough economic conditions. The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises. Some of the fund is also invested in traditional UK government bonds (gilts).
The third pillar consists of gold-related investments, including physical gold, which often acts as a 'safe haven’ during times of uncertainty. The final pillar is ‘cash’. This offers important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.
Lyon has tended to focus on companies based in developed markets, like the US and UK. This includes some of the world's best-known companies with highly recognisable brands.”
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City of London
“Long-serving manager of over three decades, Job Curtis, invests in good quality, well-managed companies, which can be bought at reasonable share prices. He likes larger, more stable companies which often have multinational operations that are robust enough to weather economic storms and still pay dividends.
Curtis thinks these are the types of companies that can support their dividends through profits and can also generate enough cash to invest for growth. This helps UK investors invest in global growth through the portfolio’s overseas revenues.
There’s some direct overseas exposure too, as Curtis takes advantage of the trust being able to invest up to 20% of its assets overseas.
Investment trusts have more flexibility than funds to smooth out the ups and downs of the stock market and help maintain a rising and sustainable income. The City of London investment trust has increased the dividend it’s paid to investors for over 56 years, the longest record of any investment trust.
As with any investment, dividends are never guaranteed and past performance isn’t a guide to the future. Curtis is part of a large, experienced, and well-resourced team of income investors at Janus Henderson and is focused on providing long-term growth in income and capital.
We think the trust could form part of an income portfolio or a broader portfolio looking to add investment in larger UK companies.”
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Murray International Trust
“abrdn’s Bruce Stout has been lead manager of the trust since 2004. Stout aims to grow income and capital over the long term by investing in companies from around the globe, as well as investing in some bonds.
There’s an emphasis on companies with resilient business models, a unique set of advantages over the competition and experienced management teams. These are the key characteristics Stout thinks makes for high-quality, financially robust companies that have the potential to grow their earnings and dividends over the long term.
The trust invests more in higher-risk emerging markets than some peers. After the US, it invests most in Asia Pacific ex Japan.
Stout doesn’t have a yield target for the companies he invests in. Instead, the trust blends companies with higher yields, and those with lower yields but with more potential for income growth. The trust has increased the dividend it’s paid to investors for 17 years.
However, as with any investment, dividends can fall at any time. We think the trust could provide useful diversification to an investment portfolio investing in more traditional income hunting grounds, like the UK.”
Article by Hal Cook, senior investment analyst, Hargreaves Lansdown
