Best performing investment trusts of 2020, Photo by Kristopher Roller on Unsplash

The Best Performing Investment Trusts Of 2020

I’ve been investing, in some shape or form, for over three decades now and I don’t think any year has been as remarkable as 2020.

There’s a lot of recency bias at play, no doubt, but have we ever seen two such extremes in share prices, with both massive gains and massive losses?

Crises of markets past

I was in nappies during the savage market crash of the early 1970s, which sounds like it was a distinct advantage.

And I don’t recall much about the crash of 1987 either. I was holding a collection of the standard privatisation shares at the time — namely British Gas, British Telecom, and BAA.

Back then I just collected my dividends twice a year and probably checked their share prices about as often.

In the mid-90s I became a much more active investor but I don’t remember much of a split market during the Asian Crisis of 1997-98.

Return information was harder to get hold of in those days with the Internet in its infancy. I think the most up-to-date information I got back then as a private investor was via Ceefax, which provided selected share price updates every couple of hours.

The bear market of 2000-3 did see a noticeable split, if I recall, with technology and biotech being trashed and traditional ‘value’ shares doing pretty well. However, that was a much more drawn-out process compared to 2020.

The global financial crisis of 2007/08 knocked everything down but financials were the hardest hit and in many cases have never recovered.

I’m still amazed to see banks like Lloyds trading at much the same share price now that they did in March 2009, which was the nadir for global markets.

Around the world

That’s enough nostalgia, though.

For context, as I write this, global markets are up around 10% for the year in sterling terms with dividends reinvested (what’s left of them, anyway).

Remarkably, most major markets are now positive for this year.

Europe as a whole is flat but ahead if you exclude the UK.

The US is up 15%, China up 30%, and Japan up 9%.

The UK is down some 13%. Only Russia (down 20%) and Brazil (30%) have fared worse.

How trusts have done

It’s a decidedly mixed picture for the investment trust sector.


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The AIC’s excellent interactive statistics resource tells me the average trust is up 15% over the last year. Take off a few per cent for the rally at the tail end of 2019 and let’s call it 10% for so far in 2020. That’s much the same return as world markets.

However, this is a market-cap weighted average and the fact that many of the biggest trusts, like Scottish Mortgage, have had a bumper year makes a huge difference.

When you look at a straightforward average then the investment trust sector has actually lost 3% so far in 2020. There are 146 trusts in positive territory but 196 underwater. Only about 80 trusts would have beaten a global tracker.

Drilling down into the individual sectors reveals why many individual trusts have struggled.

There are 65 companies in the various UK equity sectors, making up about a fifth of all investment trusts. However, their collective market cap of £17.5bn is only a tiny bit larger than Scottish Mortgage’s £15bn. That certainly surprised me.

There are around 40 property-related trusts, most of which are focused on the UK and that have seen their share prices slump this year.

Debt trusts (about 30 in total) have also been a tough place to make money.

However, add the property and debt sectors together and they only amount to £17.5bn, the same as all the UK trusts.

To put it another way, the market cap gain of Scottish Mortgage so far in 2020 pretty much cancels out all the losses made by the 130 odd trusts in the UK, property and debt sectors.

This year’s top 20 gainers

Here are the best-performing investment trusts as of 16 November:

Investment trust2020 YTD
% return
Pacific Horizon109.2
Baillie Gifford US Growth Trust90.0
JPMorgan China Growth & Income85.4
Scottish Mortgage77.1
Fidelity China Special Situations68.6
Golden Prospect Precious Metals66.7
Allianz Technology60.9
Baillie Gifford European Growth56.8
Baillie Gifford China Growth55.5
Biotech Growth54.5
Edinburgh Worldwide54.2
JP Morgan Japanese51.9
Baillie Gifford Shin Nippon47.1
Pershing Square46.1
Polar Capital Technology37.8
International Biotechnology34.2
Montanaro European Smaller Companies32.9
Augmentum Fintech31.1
Monks30.4
JPMorgan Taiwan30.1

Asia (especially China), tech and biotech are the three themes running through most of these winners. That’s no real surprise to most folks I suspect.

Golden Prospect deserves a mention for leading the commodity sector this year. As the name suggests, it specialises in gold and precious metals miners.

When the gold price surged through $2,000 in the summer, this trust was up 135% for the year but it’s slipped back somewhat since. Despite its gains, it still sits on a discount to net assets of 25%.

Hedge fund Pershing Square, run by Bill Ackman, is another one-off on the list. It rose 50% in 2019 and has repeated the feat, more or less, in 2020.

Ackman bet that markets would fall when the pandemic began but has profited from the recovery since as well. With a market cap of around £6bn, it’s the third-largest trust after Scottish Mortgage and 3i.

Baillie Gifford’s incredible year

JPMorgan has three trusts in this top twenty, which is admirable, but Baillie Gifford accounts for eight.

As well as the trusts that carry its name, Baillie Gifford also runs top-performer Pacific Horizon, Scottish Mortgage, Edinburgh Worldwide, and Monks.

The four other trusts it runs are also in positive territory, namely Japan (+21%), Scottish American and Schiehallion (both up 10%), and its UK trust (+7%).

Baillie Gifford’s open-ended funds have also done exceptionally well as many of them mirror the strategies used by its investment trusts. Of its 23 open-ended equity funds, 22 have enjoyed a positive return this year.

Old trusts, big trusts

Another notable theme across this top twenty is that many of them are of significant size and have been around for a long time.

Golden Prospect is the smallest at £30m but the next smallest are Augmentum Fintech (£190m), Montanaro European (£250m), Baillie Gifford China Growth (£260m), and International Biotechnology (£320m).

After that, we’re up to around £500m, which is the level many commentators regard as the minimum necessary to attract interest from wealth managers and give a trust a better chance of long-term viability.

Eight of the top twenty now have a market cap in excess of £1bn so should have no worries on that front.

Most of these trusts have been around for at least a decade. And where they haven’t, you can sort of trace back their history back a bit further.

Baillie Gifford US Growth joined the market in 2018 but seems closely linked in style terms to the open-ended Baillie Gifford American fund, which is now over twenty years old.

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Pershing Square IPO’d in 2014 but it existed as a limited company for a long time prior to that.

Augmentum Fintech was another 2018 newbie but started life as a partnership in 2009 with RIT Capital Partners as the sole investor.

Notable performers

Even in sectors that have struggled this year, there have been some notable winners.

Triple Point Social Housing REIT and Aberdeen Standard European Logistics Income in the property sector are both up 28%.

RDLZ Realisation, a debt trust in the process of winding down, is up by the same amount.

Private equity trusts have seen their discounts widen this year with investors trying to get ahead of potential falls in their net asset values. But HgCapital has still been able to make headway, with its tech focus seeing its shares rise 21%.

Impax Environmental Markets, now valued at over £1bn, has had another good year, recording a 27% gain. Although we have a rash of renewable energy infrastructure trusts, few managers seem to want to focus on equities in this area.

Emerging markets have had to play second fiddle to developed markets for a long time now. However, thanks to Asia’s good performance this year, they have kept up pretty well.

The more established emerging market trusts have seen some nice increases and new-ish trusts that have struggled have been among the best performers.

Fundsmith Emerging Equities is up 17% after its portfolio was streamlined and Terry Smith trimmed his involvement.

Mobius Investment Trust has risen 19% although that only takes its back to its IPO price of late 2018.

Nick Train has had a difficult year, by his own admission and by his very high historical standards.

Lindsell Train Investment Trust is up 12% with its 10-year return slumping to a mere 620%. It’s still the fifth best-performing trust of the last decade. UK-focused Finsbury Growth & Income is down 2%.

Those with a year to forget

The two trusts that used to be run by Woodford protege Mark Barnett have come back a bit now they are under new management.

Perpetual Income & Growth, which has been formally merged with Murray Income since I collected all these numbers, was down 19%. Edinburgh Investment Trust, now run by Majedie, was 12% in the red.

The old Woodford Patient Capital Trust, now Schroder UK Public Private, had a brief recovery at the end of 2019 but it’s down 28% this year and still sits at a 40%+ discount. I suspect it’s going to be a while longer before we know whether this trust can urned around or not.

And Temple Bar, a well-known UK equity income trust that also changed its manager this year, is down around 35%. But it was down 60% at one point in March.

The three worst-performing trusts of 2020 have been propping up the performance tables for some time.

JZ Capital Partners, an illogical mix of US property and micro-caps, has had difficulty with its sums and has fallen 72%.

KKV Secured Loan, a high-yield leasing trust that provides various types of plant and equipment to a wide range of industries, has fared even worse. It’s changed both its name and manager while its shares have slumped 82%.

Worst of all, though, is the aircraft leasing trust DP Aircraft I. It’s a tenth-bagger with a loss of 92%. It owns a single aircraft whereas other trusts of this type usually own several (these other aircraft leasing trusts have fallen in price this year as well but not quite as dramatically).

In summary

Many commentators have highlighted the fact that the pandemic has accelerated trends that were already underway.

And that seems to be true for investment trusts as well. The top 20 list for this year almost looks like one that covers a five-year period, such are the size of the gains.

I think 2021 could be an equally fascinating year for stock market nerds like myself.

Can the tech titans and disruptors continue to forge ahead now that widespread vaccine relief could be just a few months away?

Will the UK finally enjoy a long-overdue day in the sun once the final shape of Brexit is revealed?

And will we see beaten-down trust sectors rally due to waves of consolidation that narrow their discounts?

All of the above could even be true but I think I’ll leave precise forecasts to other folks.


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Please note that I may own some of the investments mentioned above -- you can see my current holdings on my portfolio page.

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9 Replies to “The Best Performing Investment Trusts Of 2020”

  1. Hello IT Investor

    I really enjoy your posts on here. Very informative.

    I am a little earlier in my IT journey than you (in my thirties) and have a portfolio of global looking trusts (Mid Wynd, Murray, FGT – I see this as being quite global given where the companies derive their revenues), with a big slant to smaller companies (EWI, SSON, HSL), and emerging markets (JPM Emerging, MMIT).

    One thing I am trying to get my head around is whether it is worth at this stage going into to Scottish Mortgage. On its face, it ticks a number of boxes – great managers at a well established fund house, access to unquoteds, good slant to China but flexible given the global mandate, and very good value in terms of charges.

    What puts me off is the fact it has been on a tear for so long, and probably wont do as well the next decade (your article on 30 years worth of results is sobering – it barely outperformed the market between 2000 and 2010), and its size. Im less worried about that I suppose because my time horizon is very long – decades. I am more put off by the potential for its size to get in the way of returns in the future. I appreciate that as a closed ended fund it doesn’t really have liquidity problems a la Woodford, but I do wonder if in time the size will hold back its ability to grow, and increasingly there will be companies it cannot really invest in? What do you think? Perhaps it doesn’t matter because it will always invest in very large and mega caps, though I notice even the bullish managers are tilting away from the Amazons and Facebooks of this world.

    Be very interested in your views, and thanks again for the great posts.

  2. Thanks, PKDR. Sounds like a pretty decent portfolio you’ve built up there.

    I’ve been thinking about adding SMT and/or other Baillie Gifford trusts for a while now as well and I’ve been having similar doubts to the ones you’ve mentioned. In my case, I would probably have to sell something first so that makes my decision a little more complex.

    The SMT of the 2000s was quite different though I would say. Amazon was first bought in 2004 I believe but it was several more years before the portfolio started to look more like it does today with a lot more non-UK stocks and a focus on ‘disruptors’.

    That’s not to say that the BG method of investing couldn’t move in and out of favour but knowing when that might happen is pretty much impossible of course. One option I sometimes employ in these cases is buying into a position more gradually which can lessen any regret you feel but might make your average entry price a bit higher.

    I’m probably slightly more relaxed on the size issue having looked at that with funds like Fundsmith Equity and Lindsell Train Global. Both those run more concentrated portfolios whereas SMT seems a little more diversified and only takes big positions in very large companies so I think it probably has a little more room to run.

    I did hear Tom Slater comment in a recent interview that their large size could actually help when it comes to getting access the most attractive unquoted opportunities, especially as BG can spread the risk over several funds. I’ve been impressed by Slater whenever I have heard him speak so I think SMT should be in good hands when Anderson takes more of a back seat.

    Best of luck whatever you decide to do 🙂

  3. Hi Stuart,
    I found your site from a link on the Monevator.
    The information and analysis on your site is excellent.

    Could you please manually add me to your newsletter because the confirmation email has not appeared in my InBox or Spam InBox (I’ve tried twice).
    Many thanks

  4. Thanks, TrailRunner. Sorry that the sign-up email misbehaved for you – I have added you manually so you should be all set.

  5. Interesting to hear about the unquoted companies info.

    I wish I could find a better way to assess their abilities in this area. So far, it seems to me that they own a lot of the ‘hot names’, but the key question is – what round do they buy them at? I worry that they are often in the last round, and so miss out on the real hypergrowth of earlier rounds. One has to think of the people they are competing against i.e. lots of ferocious Americans e.g. a16z who have been doing it a lot longer than BG, and must have much better networks.

    I don’t want to hate on BG – I think they do decent Sus Growth, and have obviously had an incredible 2020, but I do want to understand their Unlisted Strategy better.

    Separately – IT size is a real problem I think – anything sub-100m is pretty uninvestable I think – the liquidity and spreads are just too hideous even for an individual – some online platforms don’t even have quotes sometimes.

  6. Hi – recently discovered your excellent blog but have failed twice to sign up for the newsletter (not seeing confirmation email, including spam folder) – please could you add manually?
    Thanks
    Matt

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