In the grand scheme of things, the trust is relatively small with net assets of only £185m at the end of December 2017. However, its size has not held it back. Over the past five years, the company has delivered an annualised net asset value total return per share of 20.4%, that’s compared to a return of just 15.5% for its benchmark small-cap index.

Working to unlock value 

Strategic Equity has been able to generate this outperformance thanks to its interesting strategy of finding companies that are looking to increase their value through strategic, operational management change. The investment managers then work with these companies to enhance shareholder value. This activist approach is different to the buy-and-hold approach employed by many other investment trusts, but Strategic Equity’s returns speak for themselves.

There were just 19 Holdings in the investment company’s portfolio at the end of December, and the top 10 account for nearly two-thirds of net asset value. While this sort of concentration might not be appropriate for other investment trusts, with Strategic Equity, the fact that the firm is engaging with its investments to unlock value, reduces risk. 

For example, one of the more substantial holdings, accounting for 8% of the portfolio at the end of 2017 was small-cap Wilmington. To help unlock value here, during 2017, Strategic Equity “put forward two experienced candidates” to replace the firm’s existing chairman. These new candidates should, according to the trust’s year-end update, help the market realise the value of “deeply undervalued” Wilmington.

At the time of writing, shares in this champion investment trust are trading at a 12.8% discount to net asset value and help unlock further value from the portfolio, management is buying back shares to reduce the discount.

Emerging market play 

Another investment trust I’d buy for my portfolio today is the JP Morgan Chinese Investment Trust (LSE: JMC). 

Every investor should have some exposure to emerging markets in their portfolio as these regions are growing at a much faster clip than developed regions. Also, China specifically is becoming a world leader in technology, and the country’s tech firms have grown to become some of the most significant and most important in the world over the past decade.

JP Morgan China is well positioned to take advantage of these trends. Over the past five years, the trust has produced a total return for investors of a little over 100% thanks to its extensive exposure to Chinese tech stocks such as Tencent and Alibaba. These two holdings account for just under 20% of the portfolio.

The one downside of this investment is its high price. The total annual charge is around 1.4%, which is nearly three times more than the annual dividend of 0.5% offered to shareholders. Still, I believe that this is a this is a price worth paying to invest alongside experienced investors in one of the world’s fastest-growing economies.

The post Two investment trusts I’d buy with £1,000 today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

As such, there could be further volatility in share prices for stocks trading on both sides of the Channel. Despite this, volatility and uncertainty in the short term could prove to be long term investment opportunities, as wider margins of safety may mean risk/reward ratios are more favourable at the present time. With that in mind, here are two investment trusts which could be worth a closer look right now.

Strong performance

Reporting on Friday was Strategic Equity Capital (LSE: SEC). It has enjoyed a strong performance in its most recent financial year, with its net asset value increasing by over 29%. This is ahead of its benchmark index by around 1%, and further outperformance could be ahead.

With all of its invested assets in UK-listed stocks, the company may lack the geographical diversification offered by other investment trusts at an asset allocation level. However at a company level, it offers some geographical diversity, although since it focuses on smaller companies this may be relatively limited.

That said, Strategic Equity Capital appears to offer upside potential. Its share price continues to trade at a discount to net asset value, with the discount being around 15% at the present time. Furthermore, the outlook for the UK economy may create investment opportunities over the medium term. Wider margins of safety may be on offer, and this could create a buyer’s market where risks are lower and potential returns are higher.

Diverse offering

While all of Strategic Equity Capital’s holdings may be UK-listed stocks, TR European Growth Trust (LSE: TRG) has a range of companies from across Europe in its portfolio. It is most exposed to German equities, with over 19% of its holdings listed in Europe’s largest economy. Beyond this, it has a mix of exposure to other leading European economies including France and Italy. This provides it with a high degree of diversity within Europe which could help to lower its overall risk profile.

With the company having outperformed its benchmark by around 111% in the last five years, it has an excellent track record of growth. Its top 10 holdings make up around 15% of the total portfolio. This suggests it is highly diversified even at a company level, and may be a sound means for an investor to gain access to a wide range of European stocks in a number of different countries.

Certainly, a tapering of QE next year by the ECB could lead to pressure on the region’s growth rate. But with international diversification and a strong track record of growth, TR European Growth could help its investors to generate a seven-figure portfolio in the long run.

The post 2 dirt-cheap investment trusts that could make you a millionaire appeared first on The Twelfth Magpie.

More reading

• How much is needed in an ISA to unlock £1,220 of passive income a year?
• Forget meal deals! Here’s how £8 a day could be worth £357,000
• With a 7% yield, is this dividend share a no-brainer?
• The CMC Markets share price is smashing the FTSE 100 in 2026. Is there an opportunity here?
• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?

Peter Stephens has no position in any company mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.