Conservative investment trust tips outperformed in 2016/17

Conservative investment trust tips outperformed in 2016/17


A trio of our conservative tips achieved double-figure share price total returns in the second quarter of 2017, helping the conservative portfolio to slightly outperform the adventurous portfolio for the first time in a while.

TR European Growth was again a star performer, with continued outperformance of its peers rewarded by a tightening discount. BlackRock Throgmorton was also deservedly rerated, but still looks attractively priced given its ability to use contracts for difference to capitalise on falling as well as rising markets.

- How Money Observer's 2017/18 investment trust tips are chosen 

JPMorgan Japanese has been back in form at the net asset value (NAV) level year to date, so its discount also tightened usefully – but remains wide for its sector.

The most disappointing returns over the quarter came from Fidelity Asian Values, whose manager has been too bearish about the outlook, and NB Private Equity Partners, which has not only suffered from the 5.6 per fall in the dollar/sterling exchange rate in the first half of 2017 but may also have to wait a while for its reorganised portfolio to gain traction. Both have been replaced.

Capital Gearing was also somewhat becalmed, but is more concerned with preserving value than capitalising on further gains in a market it considers overvalued.

Temple Bar has also been treading water, but we hope its value-based approach will come into its own in rougher conditions.

- Nine conservative investment trusts for 2017/18

- Nine adventurous investment trusts for 2017/18

In the face of persistent suggestions that many actively managed funds are not worth their fees, it is encouraging that the NAV total returns of the majority of our tips have outperformed their benchmarks over both one and three years, and their share price total returns have in many cases been better still.

The exceptions include Edinburgh and JPMorgan Japanese which have both lagged over one year, but outperformed over three.

More surprisingly, Baillie Gifford Shin Nippon has lagged the main Japanese smaller company indices over one year. However, it is still far ahead of relevant benchmarks over three, five and 10 years. Both portfolios usefully outperformed the FTSE All-Share and FTSE World ex UK indices over the past 12 months, with the adventurous portfolio ahead of both indices over three years.

- Three investment trust analysts name their tips for 2017/18


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