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.
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.
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.
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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.
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.
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.
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.
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.
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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Are these total return annualised figures (i.e. including dividends)? If not, it isn't really possible to make a long term meaningful comparison between the various trusts. For example, City of London IT (CTY) is an 'equity income' trust which has paid a consistently high dividend (currently 4.8% according to Morningstar). Adding the dividend yield to the annualised percentage return figures would make a significant difference to the rankings, particularly if the dividends had been reinvested each year.
Hi Ian,
Yes, they do include reinvested dividends so they are share price total return figures. I have just added a line above the table to make that clearer.
Great article as usual.
Would be great to add a "Sort by" link on each column.
Thanks M. I think you should be able to do a straight copy and paste into Excel and sort the figures that way. But I might try and find a Word Press plug-in that offers that feature as well. UPDATED - found a plug-in so you should be able to sort the table on the page now.
Why isn't the Scottish Investment Trust in the list? It was founded in 1887 (please see https://thescottish.co.uk/who-we-are-and-what-we-do/history).
In any case, a list like this is, of necessity, riddled with survivorship bias. Any trusts which did badly in the last century will have been dissolved, absorbed or become insolvent.
Longevity has no predictive power about performance whatsoever (see, for example, the Scottish Investment Trust)
Hi Jonathan,
Scottish IT wasn't included in the AIC figures I used for this piece unfortunately. I would guess they left it out because it is in the process of being merged with JPMorgan Global G&I. I think it's roughly 8% pa over the last 30 years, so near the bottom of the list.
Survivorship bias is a problem as I noted in the article but I don't have access to data that lists all the trusts that existed back in early 1992. I think the range of figures is still instructive, though, especially when it comes to setting an upper limit on potential returns. It also shows how fortunes and fashions wax and wane.
Thanks for another great piece of analysis. Using your figures I ranked the top dozen trusts over 30 years performance, and found that a dozen of the 35 trusts had clocked up double digit annual returns over 10, 20 and 30 year periods. The odd man out was JPMorgan American which only managed a 9.5% annual growth over 20 years but delivered doubkle digit growth over 10 and 30 year periods.
Over the longer period (30 years), the top performing trust (SMT) grew 33% faster than Monks, the bottom player of the top dozen double digit performers. Over 20 years the annualised returns of the top performer (SMT again) was 73% higher than the slowest of the top dozen (JP Morgan American), whilst over 10 years the rate of annualised returns of top performer SMT was 119% ahead of AVI Global, which came bottom of my list.
I find the consistency of the long-term returns of these trusts rather reassuring in these troubled times. The only problem is that I am unlikely to be around in 20 years, let alone 30.
Keep up the good work. It is much appreciated.
Thanks for the kind words, Bill - that's spurred me to add another table breaking down the performance over each of the last three decades to see how consistent each fund has been.
Hey there Stuart,
Really interesting list and I'm happy to see that I own some of these as well (AVI Global, Blackrock Smaller Co, RCP, CGT).
Are you using this correction to "buy the dip" in any ITs?
Thanks M. I tend to be fully invested pretty much all the time so I generally put new money into the market as and when it becomes available rather hoarding cash and looking to buy dips. I might rebalance a few holdings at some point this year depending on what happens and how prices shift around.
Makes sense. I was a bit worried about a potential market bubble so kept 30% in cash and now wondering where should I deploy it...
By the way, few months ago I signed up to Money Makers (since you joined it) and it's just GREAT. Amazing interviews and great content. Keep up the great work, might not look like it but you're changing lives here.
That's great to hear M - always fantastic to get feedback like that.