How the golden oldies still make top returns
With Christmas fast-approaching, shoppers are rushing out to buy the latest gizmos and gadgets, but when it comes to investing it could be the oldest products that are the best.
investment trusts that are 100 years old or more are producing bumper returns for investors who have realised the value of these golden oldies.
the 144- year- old Scottish American trust, for example, has returned 70pc over the past three years compared to an average return of 52pc from similar investments. the 108-year-old Scottish Mortgage trust has returned a meaty 218pc over the past five years, compared to an average return of 106pc from rivals.
Meanwhile, the 133-year- old Mercantile investment trust would have turned £10,000 into £21,275 over the past five years, while the average competitor would have grown the same amount to £17,320.
investment trusts are similar to funds – they buy and sell company shares or other assets, such as bonds and property, with the aim of making returns for investors.
The main difference between the two is that trusts are listed on the stock market and, rather than buying fund units, you buy shares just as you would when investing in any other listed company. the main benefit of this is that you can always buy and sell your investment in a trust – the price of the shares is based on supply and demand.
Conversely, funds can lock investors in if they are concerned about the value of their assets.
it’s something which many property funds did after the Brexit vote last year amid fears the market would crash and there would be a run on the funds.
the first investment trust was created in January 1868. Now approaching its 150th birthday, the Foreign & Colonial investment trust still prides itself on seeking out innovative companies which are rising stars in their industries. Although figures dating back this far have the potential for error, experts estimate that £100 invested in the trust when it first launched would have grown to an incredible £10.8m.
A further 15 investment trusts were launched in the 19th century that are still around today, according to trade body the Association of investment Companies, and 23 are more than 100 years old. these dinosaur investments come with the added benefit of experience, having survived two world wars, the Great Depression and the bursting of the dotcom bubble.
tony Yousefian, investment trust analyst at Fund Calibre, says: ‘the really good investment trusts get a very loyal following so it’s not surprising they have lasted so long.’
Among his favourite golden oldies is TR Property, which invests in property companies in the UK and europe, such as London-based property developer Great Portland estates and French shopping centre giant Unibail-Rodamco, which this week bought the Westfield shopping centres. the trust, which launched in 1905, has returned 154pc over the past five years.
Yousefian also likes the 126-year-old City of London trust for its excellent track record of paying dividends – it has increased its payouts for 50 years in a row.
the trust, which has returned 67pc over the past five years, invests in UK blue-chips such as BP, Lloyds and Vodafone.
But not all these dinosaur investments have done so well. Murray international, which celebrates its 110th anniversary on Monday, has returned just 46.5pc over the past five years compared to an average of 90pc among its rivals.
While it invests in companies across the globe, its performance has been held back because it also invests in bonds, which have lagged while global stock markets have soared in recent months.
Dunedin income Growth has also been behind its peers, returning 39pc over five years compared to a sector average of 64pc.
Laith Khalaf, investment analyst at hargreaves Lansdown, says: ‘Age does not necessarily mean beauty when it comes to investment trusts. investors should look for trusts where the manager has a long tenure in charge and has a strong track record of performance in that time.’