How 36 trusts stayed ahead of rising prices

SOME investment trusts, usually investing in a basket of shares, have a proud record of growing their share price and dividends by more than UK inflation.

Research conducted by the Association of Investment Companies has identified 36 such stock market-listed investment trusts. All of them have generated both dividend growth and share price returns in excess of 2.5 per cent per annum over the past five years – 2.5 per cent being the average annual inflation rate as measured by the Consumer Prices Index.

The list includes the likes of Merchants and Witan, trusts that have long histories of annual dividend growth going back 39 and 47 years respectively. But it also features some surprises such as Templeton Emerging Markets,

Montanaro UK Smaller Companies and Fidelity Special Values that many investors tend to view as more growth-orientated trusts – rather than providing a blend of inflation-beating income growth and share price return.

Among the 36 are also specialist trusts with an investment emphasis on renewable energy (Greencoat UK Wind), private equity (Apax Global Alpha) and property (Tritax Big Box).

Annabel Brodie-Smith, communications director at the AIC, says it’s ‘encouraging’ to see such a variety of inflation-beating trusts included in the list. But she warns there is no guarantee that such performance can be repeated over the next five years.

‘Investors should do their own research and, if in doubt, consult a financial adviser,’ she says.