Five Investment Trust ideas for ISA season

Banking Article 1920X1080 Jul 22
Published: 10 Feb 2015 Updated: 03 May 2016

With the end of the tax-year deadline fast approaching, investors looking for ideas for their ISA should consider investment trusts as well as open-ended funds when mulling their choices, says Jason Hollands, Managing Director of Tilney Bestinvest.

While less numerous than their open-ended cousins, and often ignored by broker buy-lists, investment trusts can represent a superior choice, especially when it comes to accessing illiquid asset classes or volatile markets.

Investment trusts are similar to funds in that they provide a means of pooling money, but are publicly listed companies whose shares are traded on the London Stock Exchange. The price of their shares will fluctuate according to investor demand and changes in the value of their underlying assets. Another significant difference between investment trusts and other funds is that they can borrow money to finance further investment (known as ‘gearing’). This can be an advantage as sensible borrowing can benefit future investment returns, but it does increase risk.

Hollands highlights five investment trusts for different investment profiles that merit attention:

1. Core holding: Keystone Investment Trust

“Keystone invests predominantly in UK equities, but can invest up to 20% elsewhere. The trust is now managed by Mark Barnett who has a particularly strong track record of managing in tougher market conditions. The trust has a bias towards some of the more defensive, less cyclical sectors with large pharmaceutical and tobacco companies prominent amongst the top holdings. The trust is currently trading at a 4.4% discount to NAV.”

2. Racier choice: Scottish Mortgage Investment Trust

“Although the name might conjure up the image of a conservative investment strategy, this is a trust that takes a bold approach to investing in fast-growth companies from across the globe. The trust is geared and can be very volatile, but for investors prepared to take the risk it has paid off handsomely.

“The portfolio currently has 36% exposure to North America, 21% each in China and the Eurozone, with a little over 7% in the UK. The portfolio has a high weighting to technology-related companies, for example it has a major holding in Baidu, the “Chinese Google”. The fund is allowed to invest up to 5% in unquoted companies. An example of how it used this freedom was to take a position in China’s Ali Baba prior to its IPO. Although Scottish Mortgage is trading at a modest premium to NAV, long-term investors can console themselves with the knowledge that this trust has exceptionally low on-going charges of just 0.5% per annum.”

3. Income pick: Value & Income IT

“Investors need to tread carefully when hunting out income-generating investment companies as many are trading at thumping premiums in the current yield-starved environment. One that looks decent value is the Value & Income Investment Trust, which is trading at a 15% discount to NAV. This invests in a combination of high yielding UK equities, typically small and mid-sized companies, and UK commercial property. The latter typically accounts for a quarter of the portfolio.”

4. Opportunity knocks: Jupiter European Opportunities

“In the medium term, European equities are one of our preferred regions. European equities look reasonable value compared to the US and should also benefit from the supportive backdrop of the European Central Bank’s forthcoming stimulus programme which kicks off in March. This trust, managed by Alex Darwell, invests in a concentrated portfolio of companies across both the UK and Eurozone. It also has the ability to gear by up to 45%, which means it can take more risk in a rising market.”

5. Long-term option: JPMorgan Emerging Markets IT

“Emerging markets have had a torrid few years and with China slowing and the Dollar strengthening, near term challenges remain. However, for the truly long-term investor the emerging markets provide access to young and expanding populations and the rippling out of wealth. Current emerging market valuations look attractive compared to history but additionally the JP Morgan Emerging Markets IT is trading at an 11% discount to NAV. Currently the portfolio has a significant 22.4% position in India, one of the brighter spots in the emerging markets, where the BJP-led government of Narendra Modi is implementing a wide-ranging reform programme.”

Copies of the latest Premier Selection which provides details of all funds and investment trusts rated three (high quality), four (very high quality) and five (exceptional) stars by the Tilney Bestinvest research team can be downloaded for free on our website at

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Important information:

The value of investments, and the income derived from them, can go down as well as up and you can get back less than you originally invested. This press release does not constitute personal advice. If you are in doubt as to the suitability of an investment please contact one of our advisers. Past performance is not a guide to future performance. Investment trusts are similar to funds in that they provide a means of pooling your money but they are publicly listed companies whose shares are traded on the London Stock Exchange. The price of their shares will fluctuate according to investor demand and changes in the value of their underlying assets.

Different funds carry varying levels of risk depending on the geographical region and industry sector in which they invest. You should make yourself aware of these specific risks prior to investing. Underlying investments in emerging markets are generally less well regulated than the UK. There is an increased chance of political and economic instability with less reliable custody, dealing and settlement arrangements. The market(s) can be less liquid. If a fund investing in markets is affected by currency exchange rates, the investment could both increase or decrease. These investments therefore carry more risk.

Press contacts:

Roisin Hynes
0207 189 2403
07966 843 699

Matthew Gray
0207 189 2492

About Tilney Bestinvest

Tilney Bestinvest is a leading investment and financial planning firm that builds on a heritage of more than 150 years. We look after more than £9 billion of assets on our clients’ behalf and pride ourselves on offering the very highest levels of professional client service with transparent, competitive pricing across our entire range of solutions.

We offer a range of services for clients whether they would like to have their investments managed by us, require the support of a highly qualified adviser, prefer to make their own investment decisions or want to take more than one approach. We also have a nationwide team of expert financial planners to help clients with all aspects of financial planning, including retirement planning.

We have won numerous awards including UK Wealth Manager of the Year, Low-cost SIPP Provider of the Year and Self-select ISA Provider of the Year 2013, as voted by readers of the Financial Times and Investors Chronicle. We are pleased that our greatest source of new business is personal referrals from existing clients.

Headquartered in Mayfair, London, Tilney Bestinvest employs almost 400 staff across our network of offices, giving us full UK coverage, and we combine our award-winning research and expertise to provide a personalised service to clients whatever their investment needs.

The Tilney Bestinvest Group of Companies comprises the firms Bestinvest (Brokers) Ltd (Reg. No. 2830297), Tilney Investment Management (Reg. No. 02010520), Bestinvest (Consultants) Ltd (Reg. No. 1550116) and HW Financial Services Ltd (Reg. No. 02030706) all of which are authorised and regulated by the Financial Conduct Authority. Registered office: 6 Chesterfield Gardens, Mayfair, W1J 5BQ.

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This release was previously published on Tilney Smith & Williamson prior to the launch of Evelyn Partners.