3 investment trusts for a Stocks and Shares ISA

Emerging markets cover a diverse mix of countries. From big Asian countries like China and India, to Brazil and Mexico in South America, these countries offer a lot of potential as part of an investment portfolio looking for long-term growth opportunities.

These countries are all at different stages of development though and have different drivers of growth. It’s why a diversified approach is suitable for most investors looking to invest here.

It could take time for these markets to develop meaningfully, so the risks are greater, and investors should expect more ups and downs – a longer investment outlook is essential in these markets.

Some markets, like India, have seen noticeable growth in the last few years. This means the share prices of some Indian companies no longer offer as much value as before. That’s why investing with an experienced fund manager can be a good idea as they have the expertise to look for companies they believe still have growth potential.

Other markets, like China, have benefitted from government intervention. The stimulus in China in the second half of 2024 boosted markets, although whether this effect is long term, or whether there’s more to come, remains to be seen. Either way, bouts of volatility should be expected.

The JPMorgan Emerging Markets Investment Trust aims to deliver long-term growth through investing in a diverse range of emerging economies, including India, China, Taiwan, and South Africa. It mainly invests in large, established companies, but also invests in some medium and higher-risk smaller companies.

The trust’s managers have lots of investing experience between them, with lead manager Austin Forey running this trust for 30 years.

They’re supported by a large specialist analyst team who conduct thousands of meetings with companies every year. They look for high-quality companies with long-term growth prospects that they aim to hold for a long time.

Personal Assets Trust is managed by Sebastian Lyon and Charlotte Yonge at Troy Asset Management.

It’s a multi-asset investment trust, which means it holds a diverse mix of investments, and aims to shelter capital. That is, not lose money when the market takes a downturn and focus on moderate long-term growth for investors.

During a year where the global economy looks set to remain challenged and markets volatile, this trust could be a more conservative option, but still with some growth potential.

The trust is focused around four 'pillars'.

The first contains large, established companies Lyon and Yonge think can grow sustainably over the long run and endure tough economic conditions.

The managers have 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.

The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises, and traditional UK government bonds (gilts).

The third pillar consists of gold-related investments, including physical gold, which has often acted as a ‘safe haven’ during times of uncertainty.

The final pillar is ‘cash’. This helps provide important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.

The managers have the flexibility to invest in smaller companies and use derivatives, which, if used, adds risk. The trust is also concentrated, which means each investment can contribute significantly to overall returns, but it can increase risk.

We believe the trust could from part of a more cautious investment portfolio or help diversify more adventurous investments.

A globally diversified investment trust could be a good choice as part of an investment portfolio aiming for long-term growth.

F&C Investment Trust is run by Paul Niven, an experienced investor and Head of Colombia Threadneedle’s Multi-Asset Solutions.

He aims to grow an investment and the income it pays over the longer term by investing in companies from around the globe. Developed markets like the US, Europe, the UK, and Japan are the primary focus, but the trust also invests in some higher-risk Asian and emerging markets.

The manager also invests in some smaller and early-stage private companies. The rewards can be attractive, but by nature these are higher risk since they can be harder to buy and sell – meaning they’re less liquid. He can also use derivatives which adds risk.

Niven is responsible for guiding the asset allocation of the trust, which means he decides how much to invest in different regions, and managing the level of risk the trust takes.

It’s divided into different segments, each with their own dedicated manager. Each manager has different strengths, styles and areas of focus which are blended and monitored closely.

Niven’s framework centres around ‘four pillars’ – economy, policy, valuation and behavioural factors.

For example, key economic indicators like inflation and economic growth rates are monitored for different regions.

The manager and his team then assess how expensive or cheap (a measure of value) each region is compared to its history and other similar markets.

Finally, they assess how sentiment is changing towards each region.

Tapping into all corners of the market, the trust could add diversification to a portfolio focused on income or both income and growth, or it could be used to add international investments to a UK-focused portfolio.