Five investment trusts to watch for 2024 – how have they performed?

Personal Assets Trust

Run by Sebastian Lyon and Charlotte Yonge at Troy Asset Management, this is a multi-asset investment trust that aims to preserve capital – that is, not lose money when the market takes a downturn – and focuses on total returns for shareholders.

Over the six months to the end of June, the trust returned 4.12%*, which we think is a decent return for such a ‘defensive’ trust. The shares in the trust have helped returns.

Gold has also performed well so far this year, with the gold price hitting an all-time high in May, helping returns. As at the end of June, the trust had 12.7% invested in gold bullion.

With there still being so much uncertainty in markets, we think this trust could be well-placed for the rest of the year.

While the trust has a diverse range of investments, it is concentrated. This means each investment can contribute significantly to overall returns, but it can increase risk.

City of London

This UK equity income investment trust is run by Job Curtis – one of the most highly-regarded managers in the sector.

The trust aims to give investors income and growth by investing in big, good-quality UK-listed companies. However, the manager can also invest up to 20% overseas if he finds good opportunities.

While 60% of the trust’s value is invested in big companies, over £5bn in size, the remainder is invested in medium-sized and small companies which adds risk.

The trust returned 5.21%* over the six months to the end of June. While this is slightly behind the FTSE All-Share’s return of 7.43%, it’s only marginally behind trusts investing in a similar way.

The trust’s more defensive style might have held it back slightly, but the income paid is still high, with a yield of 4.80% at the end of June 2024.

Nonetheless, we think the potential for the trust to keep paying a reliable income in an environment where interest rates could start falling soon makes it attractive.

Scottish American Investment Company

Run by Baillie Gifford fund managers James Dow, Toby Ross and Ross Mathison, the trust mostly invests in global shares, but also in bonds and property.

The dividend growth record of the trust is impressive – 50 years of increases. Though income can vary and isn’t not guaranteed.

Over the last six months the trust fell 2.73%*, behind peers investing in a similar way. This is mainly because the discount has increased from -1.40% to -8.80%. The trust also has less invested in the US than the benchmark.

The US market has performed well, so this has been painful. US stocks don’t often pay as much income as their European counterparts though, so the managers are comfortable investing less there.

The trust continues to pay a decent dividend, with a yield of 2.80% as at the end of June.

The investment trust structure gives managers the flexibility to also invest in higher-risk unlisted companies, but they don’t anticipate doing so for the foreseeable future.

JPMorgan Emerging Markets Investment Trust

This trust aims to deliver long-term growth by investing in both big and higher-risk smaller companies from a diverse range of emerging economies like India, China, Taiwan, and Hong Kong.

The managers have nearly 50 years of investing experience between them, with lead manager Austin Forey running it for 29 years.

Over the first six months of the year the trust returned 1.71%*, which was behind the benchmark and peers. However, one of the reasons for this was that the discount widened over the period. In addition, however, certain stocks held in the trust fell, hurting performance. An example is HDFC Bank, a large Indian bank, which fell 9.35% over the five months to the end of May.

It’s important to note that while emerging markets offer opportunities for growth, they're typically more volatile than developed markets.

HICL Infrastructure

This trust aims to provide investors with stable, sustainable income over the long term, and some capital growth.

It invests in infrastructure assets that are vital to communities, covering sectors like transport, utilities and healthcare.

The trust fell 7.17%* over the period, partly because the discount widened, but in HICL’s case, the net asset value of the fund also fell.

The valuations of some of the trust’s assets are linked to interest rates. Rates staying higher for longer means that some of the asset values have been reduced.

On 21 July the fund was trading at a discount of 19.20%. This is a high-quality portfolio paying a yield of 6.50% so, while the performance year to date has been disappointing, we’re willing to be patient with this trust, although it must be remembered that income is not guaranteed.