This 150-year-old portfolio remains an ideal ‘buy and forget’ choice

How about this for a track record: an unbroken history of annual dividend payments that stretches back a century and a half. This extraordinary achievement – which, let’s not forget, covers a period of multiple wars, various recessions and financial crises and some decidedly anti-business governments – belongs to the Foreign & Colonial investment trust, which opened for business in 1868.

The dividend has also been increased every year since 1970 and over the past decade it has doubled, which is equivalent to an annual rise of 7.3pc – comfortably ahead of inflation.

Over its long life the portfolio has been invested in a number of radically different ways. It began by holding bonds issued by overseas governments, hence the original name of Foreign & Colonial Government Trust, changed to the current one in 1891, as our picture shows.

It later switched to bonds issued by “companies or corporations not guaranteed by any government, state or municipality”, with the first share not bought until the Twenties. That share was Shell Transport & Trading, still in the portfolio today as Royal Dutch Shell.

By 1965, however, about 95pc of the portfolio was in the stock market. Until relatively recently most of the holdings were London-listed, but the trust is now overwhelmingly global.

You can read more about how the trust invests today in our Fund of the Week column on page 9.

As for performance, £100 invested in Foreign & Colonial at the outset in 1868 would be worth around £10.8m today. Naturally, there is no peer group of other funds with which to compare this figure but the same sum in cash would have grown only to about £257,000 (these are the trust’s own figures to June last year).

The trust gave rise not only to the investment trust movement but to the very idea of modern mass-market pooled investing. Unit trusts are relative newcomers to the scene and they are often managed by groups that grew out of a pre-existing investment trust. Foreign & Colonial itself gave rise to the F&C fund group, which still manages the trust on an outsourced basis today.

Telegraph Money has long been an advocate of investment trusts as long-term savings vehicles and we know that many of our readers share that view – often their trust holdings have been passed down the generations. Foreign & Colonial had just such ordinary savers in mind at its formation all those years ago, when it said its purpose was to cater for “those of moderate means”.

It remains a great advertisement for the advantages of investment trusts and exemplifies their superiority, in my view, as long-term stewards of ordinary savers’ capital.

Their long history has not prevented them from continuously evolving their approach to investment and Foreign & Colonial is now one of a number of modern, global “multi-manager” portfolios managed on sophisticated, scientific lines. It makes an ideal “buy and forget” portfolio. Given its pedigree, the fact that you could buy it this week at a discount of about 4pc to the value of its assets will come as a pleasant surprise to many.

It’s also pretty cheap, with an annual cost of 0.54pc.

I wish it many more decades – perhaps centuries – of success.

Foreign & Colonial originally owned foreign government bonds, hence its former name of Foreign & Colonial Government Trust