Long-Term Returns Of The Oldest Trusts

A useful piece of research has just popped into my inbox courtesy of the AIC. It looks at the long-term performance — the last 10, 20, and 30 years to 31 January 2022 — of the oldest investment trusts.

It’s in honour of the Queen’s Platinum Jubilee and highlights the 35 investment companies that have 70 years or more of history. So it starts with F&C, launched back in 1868, and runs through to the young whippet that is Henderson Euro Focus that merely dates back to 1947.

I thought it was worth highlighting so I’ve rejigged the numbers to show annualised returns rather than total returns as I find these easier to comprehend and for comparison purposes.

I have also added a rank column to show the return position over 30 years more clearly and the table is sortable as well. The figures assume all dividends are reinvested.

Launch date	Rank	Company	Sector	Last 10 years	Last 20 years	Last 30 years
1868	18	F&C	Global	13.6%	9.2%	10.0%
1868	16	Investment Company	Flexible Investment	8.0%	4.6%	10.4%
1873	30	Dunedin Income Growth	UK Equity Income	9.1%	6.8%	8.3%
1873	27	Scottish American	Global Equity Income	12.9%	9.1%	8.8%
1881	7	JPMorgan American	North America	16.6%	9.5%	11.6%
1884	8	Mercantile	UK All Companies	13.2%	11.0%	11.5%
1887	14	JPMorgan Global G&I	Global Equity Income	14.7%	10.2%	10.7%
1887	25	Henderson Smaller	UK Smaller Companies	17.6%	11.8%	9.1%
1888	15	Bankers	Global	14.1%	9.8%	10.6%
1888	22	Alliance Trust	Global	13.2%	8.8%	9.4%
1889	9	BMO Global Smaller	Global Smaller Companies	12.2%	12.3%	11.3%
1889	26	Merchants	UK Equity Income	10.4%	7.6%	8.9%
1889	31	Edinburgh	UK Equity Income	7.4%	6.9%	7.6%
1889	6	AVI Global	Global	11.2%	10.8%	12.2%
1889	11	Law Debenture	UK Equity Income	12.8%	10.1%	11.1%
1891	28	City of London	UK Equity Income	8.2%	7.5%	8.8%
1898	34	Aberdeen Diversified I&G	Flexible Investment	3.5%	3.6%	5.7%
1905	2	TR Property	Property Securities	16.1%	14.6%	14.0%
1906	4	BlackRock Smaller	UK Smaller Companies	16.9%	14.6%	12.6%
1907	33	Baillie Gifford China	China / Greater China	7.9%	8.1%	5.9%
1907	20	Murray International	Global Equity Income	6.8%	10.0%	9.7%
1909	21	Witan	Global	13.5%	8.4%	9.5%
1909	1	Scottish Mortgage	Global	24.6%	16.4%	14.7%
1912	13	Hansa (A share)	Flexible Investment	3.6%	7.9%	10.8%
1923	29	Murray Income	UK Equity Income	8.0%	7.4%	8.7%
1926	10	Finsbury G&I	UK Equity Income	12.3%	11.3%	11.2%
1926	19	Temple Bar	UK Equity Income	7.2%	7.8%	9.9%
1927	24	Brunner	Global	13.6%	8.6%	9.4%
1927	35	JPMorgan Japanese	Japan	14.1%	7.1%	4.9%
1929	12	Monks	Global	14.4%	10.3%	11.0%
1929	23	JPMorgan European Growth	Europe	12.2%	8.2%	9.4%
1929	32	Shires Income	UK Equity Income	9.4%	5.7%	7.2%
1930	3	Canadian General Investments	North America	13.6%	12.3%	13.7%
1930	17	Henderson Far East Income	Asia Pacific Equity Income	6.4%	10.0%	10.0%
1947	5	Henderson European Focus	Europe	14.1%	10.3%	12.3%
–	–	Average	–	11.6%	9.3%	10.0%

As with all such tables, we need to be aware of survivorship basis. There would have been a lot more trusts of this vintage that existed back in January 1992 that are no longer around. And it will tend to be the best-performing trusts, relative to their chosen benchmarks, that are still with us today.

Long-term returns tend to bunch up

It’s interesting to see how the returns get more closely grouped over time though. Over 10 years the worst performer is Aberdeen Diversified Income & Growth at 3.5% pa and the best (no surprise) is Scottish Mortgage at an incredible 24.6%.

Over 30 years, the worst is 4.9% pa and the best (Scottish Mortgage again) is 14.7%. So none of these funds has managed to return in excess of 15% for the last three decades.

Half of these funds returned between 10% and 15% annualised over the last 30 years, 13 returned between 7.5% and 10% and 4 produced between 5% and 7.5%. That’s worth bearing in mind when setting your own expectations for very long-term returns.

How did the wider market do?

To add some context, stock market returns were excellent in both the 1990s and 2010s but pretty dreadful in the 2000s. Inflation in the UK averaged 3% over this period and was between 2% and 4% nearly the whole time.

I don’t have precise data but I reckon global markets have returned roughly 14% a year over the last 10 years, 7% over the last 20, and 9% over the last 30. The UK market has returned roughly 8% a year over 10 years, 6% over 20, and 8% over 30. However, as these are just estimates, I haven’t put these numbers in the table.

It’s also worth bearing in mind that trust discounts have narrowed over the last few decades and this means the share price total returns shown will be a little higher than the underlying net asset value returns.

Sector split

In terms of sectors, 12 of these veteran funds focus on the UK, 12 are Global, 3 each are Asia and Flexible, and 2 each are North America and Europe.

Somewhat surprising, to me anyway, is that only 3 of these funds have a smaller company focus but that may be because this sort of specialism, at least in terms of the timeframe we are looking at here, is a relatively recent phenomenon.

Long-term managers

Quite a few of these funds will have changed their remit at some point over the last 30 years so that may have an impact on their figures. Baillie Gifford China Growth was an Asian Pacific fund up until quite recently, for example. And of course, there will have been numerous fund manager and/or fund management group changes, too.

Special mention should go to Job Curtis of City Of London who I believe is the only manager to run one of these veteran trusts for the whole 30-year period. James Anderson at Scottish Mortgage (who is retiring soon) and Nick Train at Finsbury Growth & Income have both been in place for 21 years.

Returns by decade

Here’s another way of looking at this data, analysing how each trust did in each of the three past decades so we can gauge their consistency of returns a little better. This table is also sortable:

Company	Feb-12 to Jan -22	Feb-02 to Jan-12	Feb-92 to Jan-02
Scottish Mortgage	24.6%	8.8%	11.2%
TR Property	16.1%	13.2%	12.6%
Canadian General Investments	13.6%	11.1%	16.5%
BlackRock Smaller Companies	16.9%	12.4%	8.8%
Henderson European Focus	14.1%	6.6%	16.6%
AVI Global	11.2%	10.4%	15.2%
JPMorgan American	16.6%	2.8%	15.9%
Mercantile	13.2%	8.8%	12.6%
BMO Global Smaller Companies	12.2%	12.4%	9.5%
Finsbury Growth & Income	12.3%	10.3%	11.0%
Law Debenture Corporation	12.8%	7.5%	13.1%
Monks	14.4%	6.4%	12.3%
Hansa (A share)	3.6%	12.4%	16.8%
JPMorgan Global G&I	14.7%	5.8%	11.8%
Bankers	14.1%	5.7%	12.2%
Investment Company	8.0%	1.3%	23.2%
Henderson Far East Income	6.4%	13.7%	10.0%
F&C Investment Trust	13.6%	5.0%	11.5%
Temple Bar	7.2%	8.4%	14.1%
Murray International	6.8%	13.3%	9.0%
Witan	13.5%	3.6%	11.7%
Alliance Trust	13.2%	4.7%	10.7%
JPMorgan European Growth	12.2%	4.4%	11.7%
Brunner	13.6%	3.8%	10.9%
Henderson Smaller Companies	17.6%	6.2%	3.8%
Merchants	10.4%	4.9%	11.7%
Scottish American	12.9%	5.5%	8.1%
City of London	8.2%	6.8%	11.4%
Murray Income	8.0%	6.9%	11.4%
Dunedin Income Growth	9.1%	4.6%	11.2%
Edinburgh Investment	7.4%	6.4%	8.9%
Shires Income	9.4%	2.1%	10.2%
Baillie Gifford China Growth	7.9%	8.2%	1.7%
Aberdeen Diversified I&G	3.5%	3.6%	10.1%
JPMorgan Japanese	14.1%	0.4%	0.8%
Average	11.6%	7.5%	11.5%

There is a select group of four trusts that have produced in excess of 10% annualised in each of the last three decades — AVI Global, TR Property, Canadian General Investments, and Finsbury Growth & Income. Scottish Mortgage and BMO Global Smaller Companies both came pretty close though.

None of these trusts has produced a negative total return in any decade (but see the earlier comments on survivorship bias) although JPMorgan Japanese came close on two occasions.

Obviously, we are looking at arbitrary periods when doing any sort of analysis like this and investing fashions play a big part in who does best and worst in any given period. The first decade (92 to 02) finished with the dot com bust and the second (02 to 12), comfortably the worst for returns, had the global financial crisis to deal with.

Younger trusts

There aren’t many younger trusts that have managed 15% annualised over the last 30 years. I reckon there are 46 trusts launched from 1952 to 1991 that are still in existence.

Of these young pups, HgCapital (launched in 1989), Rights & Issues (1962), ICG Enterprise (1981), and North Atlantic Smaller Companies (1973) are probably the most likely candidates as they all returned between 14% and 16% a year over the three decades to 30 September 2021 (figures from the latest Investment Trusts Handbook).

For more on long-term returns, you might also be interested in a piece I did on 20 global trusts about eighteen months ago as it has some figures for the likes of RIT Capital Partners, Capital Gearing, Personal Assets, Mid Wynd, and Caledonia.

   

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Disclaimer

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

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!

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