Opened a stocks & shares ISA? Consider these high-growth investment trusts

Edward Sheldon, CFA — Fri, 06 Apr 2018 14:00:34 +0000

If you have just opened a brand new stocks & shares ISA, you may be wondering where to invest your capital. With financial markets on edge at present, investing feels a little daunting right now.

One option is to invest in an investment trust. These can be bought and sold through your broker just like regular stocks, yet unlike regular stocks, investment trusts give you access to a whole portfolio of companies, managed by a professional portfolio manager. The advantage is that you can increase your diversification and lower your investment risk.

Here’s a look at two growth-focused trusts that have performed exceptionally well in recent years.

JP Morgan Mid Cap Investment Trust

The JP Morgan Mid Cap Investment Trust (LSE: JMF) invests in medium-sized UK companies predominantly within the FTSE 250 index. The trust aims to achieve capital growth for investors, by putting it’s money in under-researched dynamic companies with strong growth potential and reliable income streams. The portfolio managers have the ability to use borrowing to leverage the portfolio in an attempt to generate higher returns.

An analysis of the portfolio reveals a number of stocks I’m quite bullish about. For example, Ashtead Group, JD Sports Fashion and OneSavings Bank, three stocks in the top five holdings, are all companies that I rate highly for their growth prospects.

The performance of this trust over the last five years has been outstanding, with the share price returning 144% to the end of February. In contrast, the FTSE 250 index returned 64%. With an ongoing charge of just 0.86%, I believe this trust is a fantastic choice for growth investors with slightly higher risk tolerances. It currently trades with a 3% discount to its net asset value (NAV).

Schroder UK Mid Cap Fund

Another growth-focused investment trust that I rate highly is the Schroder UK Mid Cap Fund (LSE: SCP). This trust also invests in mid-cap equities with the aim of generating a total return in excess of the FTSE 250 (ex-Investment Companies) index.

Over the last five years to the end of February, the trust has easily achieved that objective, with the share price returning an impressive 11.6% per year vs 10.4% for the benchmark. Since inception, SCP has delivered even higher returns for investors, generating total returns of 16.7% per year. Ongoing charges are just 0.93% per year.

The portfolio manager of this trust has a unique investment process, taking a stock-specific approach with a focus on growth companies with strong management teams, good future prospects and strong business franchises. A look at the portfolio reveals some exciting growth stocks such as food and beverage concessions specialist SSP Group, veterinary pharmaceuticals group Dechra Pharmaceuticals and UK property website Rightmove.

Given that the trust currently trades on a sizeable discount of 15% to its NAV, I believe now could be good time to take a closer look.

The post Opened a stocks & shares ISA? Consider these high-growth investment trusts appeared first on The Twelfth Magpie.

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Edward Sheldon owns shares in JD Sports Fashion. The Motley Fool UK owns shares of SSP Group. The Motley Fool UK has recommended Rightmove. 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.

Looking to invest £1,000? Here are two investment trusts to consider

Peter Stephens — Fri, 16 Feb 2018 13:20:17 +0000

With the FTSE 100 having fallen heavily in recent weeks, buying shares may not seem to be a sound move. After all, there is a good chance of further volatility, and it would not be surprising for the index to fall further as investors price in heightened inflation expectations.

However, for long-term investors such periods of time can present buying opportunities. The track record of the stock market shows that there has been a recovery from all corrections and crashes. While this can take time, buying during an uncertain period can increase potential returns.

With that in mind, here are two investment trusts which could be worth buying right now. They could help an investor to gain access to a range of stocks, and benefit from the recent market downturn.

Improving outlook

Reporting on Friday was City of London Investment trust (LSE: CTY). It has enjoyed a relatively positive half year to 31 December, with its net asset value per share rising by 4.2% versus its level at 30 June. Its overall performance was slightly better than the UK equity income benchmark, although following the recent stock market correction, it is still down 2.1% during the last six months.

During the period, the company increased its exposure to oil and gas companies such as BP and Shell. This seems to be a sensible move, since both stocks offer relatively high dividend yields and are set to benefit from an increasing oil price. Furthermore, the company’s position in housebuilders was its larger sector contributor to relative performance during the period. With generally favourable conditions set to continue, housebuilders could deliver further growth.

With a dividend yield of 4.2%, City of London Investment Trust could be a worthwhile income holding over the medium term. Although it now trades at a premium of 2.5% to its net asset value, it continues to be well-run and could post relatively strong total returns in the long run.

UK focus

Also offering upside potential is the Schroder UK Mid Cap (LSE: SCP) investment trust. It has been able to outperform the UK all companies benchmark in the last year, with its returns being 14.3% versus 8.2% for the benchmark. However, it still trades at a discount to its net asset value, with the current discount being just under 15%. This suggests that there could be upside potential from its valuation alone.

Looking ahead, the prospects for UK-focused companies could be uncertain. Brexit talks continue and the UK is little over a year from leaving the EU, transition period aside. This could mean that some of the company’s major holdings may experience a period of volatility over the medium term.

While this may affect its performance somewhat, many UK-focused mid-caps may be undervalued at the present time, owing to the potential impact of Brexit. As such, now could be a good time to buy a range of them through the Schroder Mid Cap investment trust.

The post Looking to invest £1,000? Here are two investment trusts to consider appeared first on The Twelfth Magpie.