/ SECTOR PROFILE /
“For me, IT Global is the one
investment trust sector where the
history of these funds makes a
difference,” says Lowcock. “You are
investing in the trusts, not just the
managers, which is rare. Having
a disciplined dividend policy also
helps their long-term focus and
I am not surprised, given these
factors, they have outperformed the
open-ended sector.”
TOP OF THE PILE
Sitting top of the pile over three
and five years with returns
of 153.4 and 264.8 per cent is
Lindsell Train IT, managed by
Nick Train. However, the trust
is currently trading at a 37.2 per
cent premium to net asset value
(NAV), meaning new investors are
likely to find better opportunities
elsewhere – especially with
the sector trading at an average
discount of 3 per cent.
“In this instance, investors may
wish to look to the unit trust to get
access to Train’s investment style,
because while they may be missing
out on the effects of gearing, they
are not paying such a huge price to
get invested,” he adds.
Winterflood Investment
Trusts holds three IT Global
funds in its model portfolio:
Foreign & Colonial, Monks and
Scottish Mortgage. While it has
recommended the Baillie Gifford-
managed duo of Monks and
Scottish Mortgage for some time
now, it added the F&C trust in
January this year at the expense
of Law Debenture, which was
launched in 1889.
“Foreign & Colonial is an
attractive ‘one-stop’ global equities
savings product,” explains Innes
Urquhart, a research analyst at
Winterflood. “It makes good use of
the closed-ended structure through
its allocation to private equity and
the active use of gearing.”
Urquhart adds that the trust
is also likely to benefit from the
publicity and attention generated
by its 150-year anniversary.
“We think this could increase
demand for its shares, particularly
24
PERFORMANCE OF SECTORS VS INDEX
1yr (%) 3yr (%) 5yr (%) 10yr (%)
IA Global 2.66 27.54 57.44 110.86
IT Global 13.03 47.12 81.64 146.95
MSCI AC World 11.23 23.76 64.25 89.02
Source: FE Analytics
“For me, IT Global is the one
investment trust sector where
the history of these funds makes
a significant difference. You are
investing in the trusts, not just the
managers”
from retail investors, and this
could lead to a further narrowing
of its discount (which was 3 per
cent at 28 March). Downside risk
is limited by the fund’s policy to
defend a 7.5 per cent discount.”
“Its size and fee structure means
its ongoing charges (0.79 per cent)
are competitive, particularly given
they include a look-through to fees
on its private equity investments.”
Regarding fees, Annabel Brodie-
Smith, communications director
at the AIC, says the lowering of
charges across the sector has also
boosted its appeal.
“Since the start of 2013, one-
third of funds in the sector have
cut their fees,” she says. “When
you add this to the fact they can
gear, have the freedom to invest
in areas such as private equity
and have a board of independent
directors, you can see why
investors treat the sector as a one-
stop shop.”
trustnet.com