We re­veal the best per­form­ing in­vest­ment trusts of 2018

Only 36% of trusts man­aged to de­liver a pos­i­tive re­turn in what was a very dif­fi­cult year for in­vestors

Shares - - CONTENTS DISCLAIMER - Source data for all ta­bles: Win­ter­flood. Data to 10 De­cem­ber 2018 By Steven Frazer and Lisa-Marie Janes

Were you lucky enough to own some or all of the elite group of funds which made money for in­vestors in 2018? Only 22% of ac­tive fund man­agers across all types of funds de­liv­ered a re­turn above zero this year, while a mere 36% of in­vest­ment trusts de­liv­ered a pos­i­tive re­turn, ac­cord­ing to anal­y­sis by AJ Bell.

While life has clearly been tough, cer­tain in­vest­ment trusts stand out from the crowd thanks to their mar­ket-beat­ing per­for­mance. Let’s now take a look at some of the best per­form­ers over the past year across dif­fer­ent groups.

2018 TOP PER­FORMER IN THE GLOBAL CAT­E­GORY: Lind­sell Train In­vest­ment Trust (LTI) +41%

This fund has a fo­cus on high­qual­ity com­pa­nies which gen­er­ate large amounts of cash flow and pay grow­ing div­i­dends.

In­vestors have reg­u­larly been happy to buy the shares at a large pre­mium to net as­set value, cur­rently 48.7%. This is be­cause they be­lieve the trust’s large stake (ac­count­ing for 47% of its port­fo­lio) in the un­quoted Lind­sell Train as­set man­age­ment busi­ness is grossly un­der­val­ued.

Some of the key hold­ings in the trust to have driven the good an­nual per­for­mance in­clude pay­ments group Pay­pal and Irn

Bru drinks group AG Barr (BAG).


This is the only global equity in­come in­vest­ment trust out of a group of six to de­liver any pos­i­tive share price re­turns in 2018, ac­cord­ing to data from Win­ter­flood.

The in­vest­ment trust aims to grow its div­i­dend faster than in­fla­tion. Among the top hold­ings are Coca-Cola, John­son & John­son and UK-listed in­surer Ad­mi­ral (ADM).

Scot­tish Amer­i­can’s per­for­mance has been helped by div­i­dend growth in global eq­ui­ties with a smaller in­crease in in­come from the bond port­fo­lio, com­pris­ing 5.8% of its over­all hold­ings.

In the first half of 2018, ed­u­ca­tion com­pany Pear­son

(PSON) and Gucci owner Ker­ing were flagged as star per­form­ers.

2018 TOP PER­FORMER IN THE UK EQUITY IN­COME CAT­E­GORY: Fins­bury Growth & In­come (FGT) +2%

An­other fund run by the pop­u­lar Lind­sell Train team, Fins­bury Growth & In­come has a pre­dom­i­nantly UK fo­cus al­though in­vestors do ben­e­fit from some global flex­i­bil­ity. The trust is run along War­ren Buf­fett prin­ci­ples that tar­gets build­ing a con­cen­trated port­fo­lio of what it be­lieves are high qual­ity com­pa­nies that have strong brands and pow­er­ful mar­ket pres­ence, typ­i­cally with pric­ing power. In­vestors will find house­hold names like Di­a­geo (DGE), which owns var­i­ous drinks brands in­clud­ing Guin­ness and Bai­leys, Unilever (ULVR) and Burberry (BRBY) in the fund, with solid and grow­ing div­i­dends on of­fer.

It is the only in­vest­ment trust in the UK equity in­come cat­e­gory to put up pos­i­tive re­turns over the past year on a to­tal re­turn ba­sis.

2018 TOP PER­FORMER IN THE UK ALL COM­PA­NIES CAT­E­GORY: Wood­ford Pa­tient Cap­i­tal (WPCT) +7%

Pa­tient in­vestors have fi­nally been re­warded af­ter a dif­fi­cult few years for the in­vest­ment trust. The mar­ket pre­vi­ously ex­pressed dis­ap­point­ment over its gen­eral per­for­mance and a key clin­i­cal trial fail­ure from port­fo­lio hold­ing biotech Prothena.

The trust en­joyed a re­ver­sal of for­tunes in 2018 af­ter port­fo­lio hold­ing In­dus­trial Heat, an en­ergy tech firm, ben­e­fited from a reval­u­a­tion uplift of 357% to $112.9m in Septem­ber and Au­to­lus, an­other hold­ing, floated on the US NAS­DAQ in­dex in June.

De­spite th­ese suc­cesses, the in­vest­ment trust still trades at a 13% dis­count to NAV at the time of writ­ing.


It has been an im­pres­sive year for this ac­tivist smaller com­pany fund given the mod­est rel­a­tive per­for­mance of UK stock mar­kets over­all.

Crys­tal Am­ber uses com­plex stock screen­ing tools and a vast net­work of in­dus­try and fi­nan­cial mar­ket con­tacts to iden­tify op­por­tu­ni­ties, then tries to pro­vide real sup­port for com­pany man­age­ment’s in the best in­ter­ests of all stake­hold­ers.

Turnarounds are a big part of the process while a stake in reg­u­larly spec­u­lated takeover tar­get STV (STV) has played well for the trust’s per­for­mance.


Flex­i­ble in­vest­ment essen­tially cov­ers multi-as­set and cap­i­tal preser­va­tion funds. The top per­former this year was Cap­i­tal Gear­ing, which aims to pre­serve share­hold­ers’ wealth and achieve cap­i­tal growth.

The in­vest­ment trust has done ex­actly what it is meant to do – de­liver the goods when times are bad.

It has not only pro­tected in­vestors’ money, but also helped to grow it by a small amount. That’s to be ap­plauded against a back­drop of fall­ing mar­kets in most parts of the world in 2018.

Funds and eq­ui­ties ac­count for 36% of the port­fo­lio with in­dex-linked govern­ment bonds com­pris­ing 35%. Re­main­ing as­sets are spread over cor­po­rate debt, con­ven­tional govern­ment bonds, cash and gold.

In­vestors are clearly happy to pay a higher price to ac­cess this de­fen­sive ve­hi­cle as its shares are trad­ing at a 3.3% pre­mium to net as­set value.

2018 TOP PER­FORMER IN THE IN­FRA­STRUC­TURE (GEN­ERAL) CAT­E­GORY: 3i In­fra­struc­ture (3IN) +32%

In­vest­ing in mo­bile phone masts, oil tankers, wind farms and air­ports may be a long way from glam­orous but 3i In­fra­struc­ture’s strat­egy is about de­liv­er­ing re­li­able 8% to 10% an­nual re­turns.

That the trust has put up a 32% to­tal re­turn (share price and div­i­dends com­bined) over the last year is tes­ta­ment to the fund’s abil­ity to spot and build a pipe­line of op­por­tu­ni­ties, then work closely with port­fo­lio com­pa­nies to ex­tract top per­for­mance.


Emerg­ing mar­kets have been out of favour for much of 2018 as US/China trade ten­sions have rat­tled on and wor­ries mount over debts in many mar­kets as the dol­lar soars.

Yet even against th­ese chal­lenges this trust has man­aged to post pos­i­tive 12-month re­turns when oth­ers have failed to do so.

Run by man­ager Austin Forey, Chi­nese stocks dragged on per­for­mance, but there were bet­ter re­turns from an over­weight po­si­tion in Brazil and gen­eral con­sumer dis­cre­tionary se­lec­tions.

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