SCHRODERS
ONE OF THE
BIGGEST
ATTRACTIONS
OF INVESTMENT
TRUSTS IS THEIR
ABILITY TO
CONSISTENTLY
INCREASE THEIR
DIVIDENDS
so if managers think there is value
in a particular market, they can
borrow money to use for further
investments. This can magnify
gains in a rising market, but
conversely it can amplify losses in
a falling one. As a result, the more
a trust borrows, the greater the
capital risk.
WHERE TO INVEST
Given the long term nature of
saving for children who won’t need
the money for 18 years or more,
parents who are prepared to accept
the associated risks can afford
to look to more volatile parts
of the market which often offer
the highest potential for growth.
Broadly speaking, volatility
resulting in losses in the short term
shouldn’t matter, because time is
on your side and you can wait for
markets to recover.
Asia presents a compelling
choice for long-term investors – it
is a strong growth area already.
According to the World Trade
Report 2014, Asia recorded the
fastest regional GDP growth in
2013, at 4.2 per cent – almost equal
to its growth in the previous two
years. Despite such rapid growth,
many global investors have
overlooked or underestimated the
size of the Asian opportunity. The
two rising economic superpowers
– China and India – are both
undergoing substantial reforms.
If successful, these could greatly
increase the appeal of investment
trusts with a focus on Asia.
A trend of consumerism is
powering growth prospects
and there is a burgeoning
wealthy middle class buying
into the western lifestyle. This
is encouraging high domestic
consumption, low debt and
substantial savings. There is also
a large, growing population that
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