Investing is a long game. You should try to build up your assets over 20, 30, 40 or 50 years, not just two or three years. Longevity is a virtue, and the two investment trusts I look at today have a 130-year track record, which could make them ideal for far-sighted investors.
Foreign & Colonial
The renowned F&C Investment Trust (LSE: FCIT) was launched a little over 150 years ago in 1868. It is now valued at £ 3.66 billion and aims to deliver long-term capital and earnings growth by investing in an internationally diversified equity portfolio, as well as unlisted securities and private equity.
Recent performance has been good – it’s up 99% over the past five years, up from 77% for the global benchmark. In the past 12 months it rose by as much as 8.8%, at a time when most indices were actually falling. So it doesn’t just live from its history and reputation.
One reason for this success, however, is the oversized exposure to the US stock market, which has beaten most of the others in the past few years. Around 50% of the fund is invested in the USA. If you already have sufficient exposure to the US, you may be able to skip this. US technology giants are among the top 10 positions Amazon, Microsoft, Google owner alphabet and FacebookSo you can probably guess where the recent strong growth is coming from.
The growth is impressive nonetheless, and F&C also offers you exposure in Europe, emerging markets, Japan and the UK. The trust trades at an average discount of 6.8% on its net asset value, but it’s currently down to 1.47%, suggesting that it is in demand right now. A running fee of 0.79% is not too expensive.
Your decision will depend in part on where you want to put your money. The UK, for example, is relatively undervalued. But F&C Investment Trust could be a good one-stop fund if you’re lucky enough to make it big in the U.S.
While F&C was the original investment trust, many more were formed in the late 19th century, including the British Empire Trust (LSE: BTEM). It was founded in London in 1889 as The Transvaal Mortgage, Loan and Finance Company Limited with the aim of investing in the hot emerging market opportunity of the time – the Transvaal colony in southern Africa, a region rich in minerals and resources.
Now a globally diversified investment trust with nearly £ 1 billion in assets, it now follows what investment manager Joe Bauernfreund calls a “unique strategy of investing in asset-backed companies, including holding companies, closed-end funds, real estate companies and from June 2017 Japanese companies rich in cash. “The top position is Japan Special Situations, which represents 15% of the total fund.
British Empire Trust is also active in the global investment trust sector, but is less top heavy with US stocks. In fact, the largest exposure is in Europe at 26%, followed by North America at 24%, Asia Pacific stocks and Japan at 18% each. The UK is only 1% which could give you the much-needed diversification from these shores. It also means that these two funds could balance each other out quite well. Otherwise, there are two other esoteric global investment trusts to consider here.
John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, serves on the Board of Directors of The Motley Fool. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. harveyj has no position in any of the stocks mentioned. The Motley Fool UK owns and has recommended Alphabet (C shares), Amazon and Facebook. The Motley Fool UK owns shares in Microsoft. Views on the companies mentioned in this article are those of the author and therefore may differ from the official recommendations we make on our subscription services such as Share Advisor, Hidden Winners, and Pro. At The Motley Fool, we believe that taking diverse insights into account makes us better investors.