<p>A briefer piece this week simply looking at what types of investment trusts have done best and worst so far this year.</p>
<p><!--more-->The data is as of 18 April 2020 so it&#8217;s already little wrinkly. Back then you actually had to pay money to buy oil!</p>
<p>And although many of the figures look pretty grim, they are considerably better than they would have been if I had done this exercise a few weeks earlier!</p>
<p>I&#8217;ve put smaller company trusts into their respective regional grouping (i.e. UK, Europe, Asia Pacific, Global etc) to keep things simpler.</p>
<p>Finally, there&#8217;s a handful of trusts that didn&#8217;t fit in neatly into the buckets I chose. Those have been excluded entirely.</p>
<p>Let&#8217;s start at home&#8230;</p>
<h2>1. UK</h2>
<ul>
<li><strong>Number of trusts:</strong> 63</li>
<li><strong>Average:</strong> -28.8% (all return figures are share-price total return)</li>
<li><strong>In positive territory:</strong> 0/63</li>
<li><strong>Best:</strong> Finsbury Growth &; Income -11.9%</li>
<li><strong>Worst:</strong> Chelverton UK Dividend -52.8%</li>
</ul>
<p>Many commentators thought the UK market was cheap at the start of this year, even after the short-lived Boris bounce. But that provided no protection. As well as hosting the largest number of trusts, the UK also has the worst average performance.</p>
<p>UK markets were down 23% and the average UK investment trust (weighted towards smaller companies for the purpose of this exercise) is down a fair bit more.</p>
<p>Nick Train&#8217;s <a href="https://www.itinvestor.co.uk/2020/01/comparing-lindsell-trains-main-funds/">Finsbury Growth &; Income</a> has put in the best individual showing but it&#8217;s still lost 12%.</p>
<p>Temple Bar has been the most notable poor performer, down almost by a half. Its manager, Alastair Mundy, has recently taken leave for health reasons (let&#8217;s hope he gets well soon) and the trust&#8217;s board are reviewing its management arrangements.</p>
<h2>2. Europe</h2>
<ul>
<li><strong>Number of trusts:</strong> 14</li>
<li><strong>Average:</strong> -19.1%</li>
<li><strong>In positive territory:</strong> 0/14</li>
<li><strong>Best:</strong> Baillie Gifford European Growth -7.8%</li>
<li><strong>Worst:</strong> Baring Emerging Europe -31.5%</li>
</ul>
<p>Europe (excluding the UK) is down 15% year to date, so it&#8217;s not surprising that this group of trusts has fared a little better.</p>
<p>Baillie Gifford makes the first of many appearances among the best performers, having taken over the management of this trust in late 2019.</p>
<p>And Alexander Darwell&#8217;s European Opportunities, the best long-term performer in this group, comes close behind in second place.</p>
<h2>3. Asia Pacific (including Japan)</h2>
<ul>
<li><strong>Number of trusts:</strong> 34</li>
<li><strong>Average:</strong> -15.8%</li>
<li><strong>In positive territory:</strong> 1/34</li>
<li><strong>Best:</strong> JPMorgan China Growth &; Income +9.0%</li>
<li><strong>Worst:</strong> India Capital Growth -40.5%</li>
</ul>
<p>Asia Pacific markets are down some 10% year to date and again the average trust failed to keep pace.</p>
<p>But after looking at 111 trusts we now have 1 in positive territory!</p>
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<p>In sterling terms, Chinese markets are up 0.25% year to date, so perhaps it&#8217;s no surprise a China-focused trust tops this group. This particular trust also seems to have benefited from an announcement in early February that it would <a href="https://www.itinvestor.co.uk/2020/04/will-investment-trust-dividends-hold-up/">set its dividend</a> at 4% of its net asset value.</p>
<p>By way of contrast, the trusts specialising in India all seem to have had a shocker in 2020.</p>
<h2>4. North America</h2>
<ul>
<li><strong>Number of trusts:</strong> 9</li>
<li><strong>Average:</strong> -18.1%</li>
<li><strong>In positive territory:</strong> 1/9</li>
<li><strong>Best:</strong> Baillie Gifford US Growth +13.9%</li>
<li><strong>Worst:</strong> Gabelli Value Trust -31.2%</li>
</ul>
<p>With the US down by 5% this year when measured in pounds, the average trust here is a long way behind.</p>
<p>But there are relatively few funds in this grouping and many of them specialise in smaller companies which have been much harder hit than the US tech giants.</p>
<p>Baillie Gifford notches up its second top slot with a fund that is just two years old.</p>
<p>We now have 2 trusts in positive territory. Happy days!</p>
<h2>5. Global</h2>
<ul>
<li><strong>Number of trusts:</strong> 42</li>
<li><strong>Average:</strong> -15.6%</li>
<li><strong>In positive territory:</strong> 3/42</li>
<li><strong>Best:</strong> Scottish Mortgage +7.2%</li>
<li><strong>Worst:</strong> BlackRock Frontiers -32.4%</li>
</ul>
<p>Lumping both emerging markets and global smaller companies in with mainstream global funds is probably the major reason that the average trust in this group trails the 11% decrease in global indices so far this year.</p>
<p>Most of the major global funds we know and love have held up pretty well, although F&;C (-18%) and Witan (-25%) are notable exceptions.</p>
<p>Scottish Mortgage was long ridiculed for its big stake in Tesla. But Tesla is up some 75% this year and is now the trust&#8217;s second-biggest holding. Its biggest &#8212; Amazon &#8212; is up by a quarter. Combined, these two account for around a fifth of Scottish Mortgage&#8217;s portfolio.</p>
<p><a href="https://www.itinvestor.co.uk/2020/02/manchester-london-long-the-future/">Manchester &; London</a> and Edinburgh Worldwide are the other two trusts in positive territory.</p>
<h2>6. Tech, biotech and growth capital</h2>
<ul>
<li><strong>Number of trusts:</strong> 15</li>
<li><strong>Average:</strong> -3.4%</li>
<li><strong>In positive territory:</strong> 8/15</li>
<li><strong>Best:</strong> Schiehallion +13.9%</li>
<li><strong>Worst:</strong> Schroder UK Public Private -39.5%</li>
</ul>
<p>This is the best performing group, both in terms of its average and the proportion in positive territory. In fact, only three trusts here have lost more than 10%.</p>
<p>And it&#8217;s victory number four for Baillie Gifford although it is their last appearance in the top slot.</p>
<p>The long-suffering shareholders of Woodford Patient Capital were hoping the appointment of Schroders might spark a recovery in its fortunes, but it&#8217;s a horrible time to be a forced seller or looking for fresh funding.</p>
<p>This is also the first of four groups were the majority of trusts are less than 10 years old, so there&#8217;s less history on how each sector fared during the last major financial crisis.</p>
<h2>7. Infrastructure and renewable energy</h2>
<ul>
<li><strong>Number of trusts:</strong> 20</li>
<li><strong>Average:</strong> -6.3%</li>
<li><strong>In positive territory:</strong> 3/20</li>
<li><strong>Best:</strong> Gore Street Energy Storage +4.3%</li>
<li><strong>Worst:</strong> Premier Global Infrastructure -17.9%</li>
</ul>
<p>Some of the froth has come off this sector but it&#8217;s largely held firm.</p>
<p>Gore Street has struggled for most of the two years it&#8217;s been listed, trading either at a small premium or a discount, but it seems to be finding its feet now.</p>
<p>Infrastructure funds seem to have performed worse than renewable energy so far this year, although BBGI and <a href="https://www.itinvestor.co.uk/2019/06/hicl-infrastructure/">HICL</a> are notable exceptions &#8212; both are roughly break-even.</p>
<h2>8. Debt and leasing</h2>
<ul>
<li><strong>Number of trusts:</strong> 35</li>
<li><strong>Average:</strong> -26.7%</li>
<li><strong>In positive territory:</strong> 2/35</li>
<li><strong>Best:</strong> RDLZ Realisation +20.5%</li>
<li><strong>Worst:</strong> SQN Asset Finance -68.5%</li>
</ul>
<p>I&#8217;ve always steered clear of this sector as I have a poor understanding of what most of these trusts actually invest in. I&#8217;m certainly not regretting that decision.</p>
<p>Only five of these trusts have a 10-year history and I suspect a major shake-up is on the way.</p>
<p>A third of this group is down by more than 35% and the four <a href="https://www.itinvestor.co.uk/2019/02/the-hidden-risks-behind-alternative-asset-funds/">aircraft leasing funds</a> are all down by more than half.</p>
<p>Yuk.</p>
<h2>9. Property</h2>
<ul>
<li><strong>Number of trusts:</strong> 36</li>
<li><strong>Average:</strong> -19.4%</li>
<li><strong>In positive territory:</strong> 3/36</li>
<li><strong>Best:</strong> Triple Point Social Housing +12.6%</li>
<li><strong>Worst:</strong> AEW UK -39.9%</li>
</ul>
<p>There are pockets of good news here, with the social housing REITs and the likes of Supermarket Income REIT in positive territory.</p>
<p>I&#8217;m a little surprised to see Tritax Big Box down more than 20% as it seems to be held in high regard by many folks. <a href="https://www.itinvestor.co.uk/2019/09/tr-property-real-estate-superstar/">TR Property</a> is down by a third so I may take a closer look at that again.</p>
<p>I always think of this as a fairly well-established sector, but only a quarter of these trusts have a 10-year record.</p>
<h2>10. Private equity</h2>
<ul>
<li><strong>Number of trusts:</strong> 18</li>
<li><strong>Average:</strong> -27.7%</li>
<li><strong>In positive territory:</strong> 0/18</li>
<li><strong>Best:</strong> BMO Private Equity -5.7%</li>
<li><strong>Worst:</strong> Electra Private Equity -62.7%</li>
</ul>
<p>We&#8217;re back into the realms of more established trusts now.</p>
<p>There&#8217;s been a fair amount of speculation that private equity funds might be slow to write down their investments after the recent market falls. But given this group has the second-worst average performance, it seems many investors aren&#8217;t hanging around to find out.</p>
<p>Electra, the biggest loser, is in the process of winding itself up and around two-thirds of its asset value is an investment in TGI Fridays.</p>
<p>The two Better Capital funds continue to struggle but 3i, a long-term star performer, has fallen 30% and has seemingly lost the premium rating it has enjoyed the past seven years.</p>
<p>The BMO fund claiming the top spot is another well-regarded trust and it just pips <a href="https://www.itinvestor.co.uk/2019/03/hgcapital-trust-tech-heavy-private-equity/">HGCapital</a>.</p>
<h2>11. Flexible and Hedge Funds</h2>
<ul>
<li><strong>Number of trusts:</strong> 30</li>
<li><strong>Average:</strong> -13.0%</li>
<li><strong>In positive territory:</strong> 6/30</li>
<li><strong>Best:</strong> BH Macro 29.1%</li>
<li><strong>Worst:</strong> JZ Capital Partners -61.9%</li>
</ul>
<p>You would have expected many of these trusts to have weathered the storm to some extent. The two BH trusts (Macro and Global) certainly have and both <a href="https://www.itinvestor.co.uk/2020/02/personal-assets-trust-bear-turned-up-to-11/">Personal Assets</a> and Ruffer have posted small increases.</p>
<p>Pershing Square, led by Bill Ackman, <a href="https://www.theaic.co.uk/aic/news/citywire-news/bill-ackman-i-considered-liquidating-entire-pershing-square-equity-portfolio">who famously hedged its portfolio</a> earlier this year, also made a small gain.</p>
<p>But it&#8217;s a varied sector and many have struggled big time. Like many of the poorest performers, JZ Capital went into 2020 in a very sorry state and investors didn&#8217;t need a second invitation to leave the party.</p>
<h2>Summing up</h2>
<p>It&#8217;s been a brutal year (and it&#8217;s far from over of course) yet one in twelve trusts have managed to deliver a positive return.</p>
<p>Broadly speaking, only tech/healthcare-heavy trusts and renewable energy have been consistently decent performers. Other sectors have had stars here and there but plenty of laggards, too.</p>
<p>I was hoping this exercise would highlight a few names that had been unfairly bashed but the pickings look fairly slim in that regard. I&#8217;ve mentioned a few above and I&#8217;m still drawn to UK Smaller Companies as a promising fishing ground despite the savage beating it&#8217;s had in 2020.</p>
<p>Instead, it&#8217;s another reminder that those of us favouring investment trusts need to be more prepared to take the rough with the smooth.</p>
<p>Not only do discounts tend to widen in bear markets but the level of borrowing that many trusts use often magnifies any drops.</p>
<p>In the long run, both these factors <em>should</em> work in our favour. Markets tend to rise much more often than they fall and the volatility in discounts can provide more attractive entry points.</p>
<p>But you have to stick around and stay invested to reap the benefits.</p>
 
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<p>Please note that I may own some of the investments mentioned above -- you can see my current holdings on <a href="https://www.itinvestor.co.uk/portfolio/">my portfolio page</a>. </p>
<p>Nothing on this website should be regarded as a buy or sell recommendation as I'm just a random person writing a blog in his spare time and I am not authorised to give financial advice. Always do your own research and seek financial advice if necessary!</p>
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