Diversified investment trust

As it sounds, the Pacific Horizon Investment Trust (LSE:PHI) is focused on increasing investors’ wealth through buying what its managers consider to be the best growth shares in the Asia-Pacific region and Indian Sub-continent.

Understandably, stocks from big markets such as Hong Kong and China take up roughly a third of the trust’s assets. Another 20% is invested in India. Further down, holders get to own shares from economies such as Vietnam and Indonesia. 

This suits my own investing objectives. While most of my cash remains invested in developed nations, I do want some exposure to those that have very attractive prospects going forward thanks to the rising affluence of their populations. 

With between 40 and 120 holdings at any one time, the trust isn’t overly dependent on a few companies succeeding either. Based on its most recent factsheet, its biggest position is in Singaporean internet giant SEA Limited. Indian carmaker Tata Motors and base metals miner MMG Limited take second and third spots respectively. 

Opportunity?

Up until very recently, PHI has been knocking the ball out of the park. From the March 2020 market crash to mid-February 2021, the share price rocketed roughly 250%. That’s the sort of performance I might get from small-cap companies! Since then, however, it’s lost momentum. 

As much as I see this as an opportunity, buying now is not devoid of risk. Past performance is, after all, no guide to the future. It’s quite possible that the recent weakness seen in the share price will continue for a while if, for example, the pandemic continues to ravage India.

There’s also the 0.92% management fee to consider. Pacific Horizon Investment Trust’s recent returns might dwarf those of an emerging markets index fund but the latter is a far cheaper alternative.

Worth the risk

I think these risks are worth the potential rewards. Timing the market sounds great in theory. However, it’s difficult to do consistently in practice. So, I’ll drip-feeding money into PHI. That may not be the optimum strategy if its share price rises from here. However, it makes the buying process less challenging psychologically. 

With regard to the fees, I’m content to assume that the investment trust’s managers know this part of the global market better than I do. Backing this up, PHI has an active share of 91%. This means its managers are actively picking stocks rather than just tracking one or more indexes. The higher this active share percentage, the more confident I can be that the managers are at least attempting to generate better returns.

As well as offering geographical and sector diversification, PHI can also buy in to private companies like its hugely popular Baillie Gifford peer Scottish Mortgage Investment Trust. This is something passive funds won’t be able to replicate and could make a big difference to performance. 

Long-term hold

The Pacific Horizon Investment Trust is unlikely to generate the same performance in 2021 as it did last year. Even so, I see this as another solid ‘buy-and-forget’ addition to my portfolio. I hope buying now could still lead to great returns over the next 10 years.

The post 1 of the best investment trusts to buy now! appeared first on The Twelfth Magpie.

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Paul Summers owns shares in Pacific Horizon Investment Trust and Scottish Mortgage Investment Trust. The Motley Fool UK owns shares of and has recommended Sea Limited. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, with over 3,000 companies listed in India alone, investing in the region is best left to the professionals. With that in mind, here are two top performing Asia-focused investment trusts that I believe are worth your money today. 

Top-performer 

The Schroder Asia Pacific Fund (LSE: SDP) is one of the most recommended Asia-focused (ex-Japan) investment trusts listed in London today. Assets of the trust are spread throughout the region. 31% of assets are invested in China, 20% in Hong Kong, 17% in South Korea and 22% split between Taiwan and India. The remainder is invested in smaller Asian economies. 

Schroder’s largest holding is Taiwan Semiconductor Manufacturing, the world’s largest dedicated independent semiconductor foundry, which has seen sales nearly double since 2013 thanks to the booming global tech market. Other significant holdings include Chinese tech giants Alibaba and Tencent, both rivals to the Western world’s Amazon and Google. 

Well-timed bets on Aisa’s fastest-growing tech companies have helped the Schroder’s fund churn out a 91% return for investors over the past five years. This performance actually understates the real return because at the time of writing the trust is trading at a discount to net asset value (NAV) of 10.6%. 

The annual operating charge for the fund is 1% and it yields 1.3%. 

China-focus 

In comparison to Schroder, the Pacific Horizon (LSE: PHI) investment trust has a much higher exposure to China. Around 12% of the firm’s assets are invested in Alibaba and Tencent, compared to 10% for its peer fund. Other top China holdings include JD.Com, Geely Automobile Holdings and Ping An Insurance. 

The extra China exposure has undoubtedly paid off for the firm in recent years. Over the past five years, the investment trust has produced a return for shareholders of 116%, excluding dividends. And I think this is just a taste of things to come. Alibaba and Tencent are two of China’s largest and most successful tech companies, both are spending billions to grow their businesses and expand further, both across China and the rest of the world. 

The one downside of this investment compared to Schroder is that it is slightly more expensive, and lacks a dividend yield.  The annual operating charge is 1.07%, and the trust currently trades at a 1.8% discount to NAV. 

So, if you’re looking for an undervalued bet on Asia’s economic growth, Schroder might be the better buy. Nevertheless, I’m positive about the outlook for both of these trusts. 

Asia comprises a full 30% of the world’s land area with 60% of the world’s current population. It is estimated that the population of both China and India will surpass 1.5bn by 2022, presenting companies with a vast market of mostly young consumers. 

Against this backdrop, I reckon these regions could be the best place to invest for the next decade. Both Pacific Horizon and Schroder Asia Pacific can help you gain this exposure without having to take on too much risk. 

The post Have £2,000? Here are 2 investment trusts you might regret not buying appeared first on The Twelfth Magpie.

More reading

• Why Barclays shares could have a huge second half of 2026
• Back below 500p, is it time to consider BP shares again?
• Is there any value left in Lloyds shares now they’re over £1?
• How much would I need in a Stocks and Shares ISA to target £19,036 a year in second income?
• After huge new nuclear deals, are Rolls-Royce’s sub-£15 shares set to power higher?

Rupert Hargreaves owns no share mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (A shares) and Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.