As we head into 2026, there are risks aplenty.
Whether that’s geo-political risks and conflicts, stretched valuations or above target inflation, there’s lots for investors to contend with.
In an uncertain environment, we think it makes sense for investors to diversify across asset classes, regions, sectors and styles to reduce the risk that any one event blows your whole portfolio off course.
Here are our five investment trusts to watch for 2026 and beyond.
Remember, investing in these trusts isn’t right for everyone. Investors should only invest if the trust’s objectives align with their own, and there’s a specific need for the type of investment being made.
You should understand the specific risks and charges of a trust before investing, and make sure any new investment forms part of a diversified portfolio. Closed-ended funds can trade at a discount or premium to the net asset value (NAV).
As ETFs trade like shares, both a buy and sell instruction will be subject to share dealing charges within your Hargreaves Lansdown account except online in a Junior ISA.
This isn’t personal advice or a recommendation to invest. Remember all investments and any income they produce can fall as well as rise in value, so you could get back less than you invested. Past performance isn’t a guide to future returns. If you’re not sure an investment is right for you, speak to a financial adviser.
Alliance Witan Trust
When it comes to diversifying an investment portfolio, making use of trusts that invest in stock markets all over the world seems like a sensible place to start. This should help to reduce risks surrounding individual country politics or economics. And for portfolios that already have a lot invested in large US technology companies, or are focused more on the UK, adding some additional regional diversification could be useful.
The Alliance Witan Trust aims to grow an investment and provide a rising income over the long term by investing in companies from around the globe. Larger companies from developed markets are the primary focus but it also invests in higher-risk smaller companies and emerging markets.
The trust adopts a multi-manager approach, which means portions of the trust are run by different fund managers, and it’s solely focused on shares. This means there's plenty of diversification on offer.
The trust’s Investment Committee believes that the majority of stock pickers outperform with their highest conviction investments but hold back returns with their smaller holdings. That’s why they only let most of their underlying managers invest in their 20 best ideas. This number is big enough to spread risk and is also a manageable number of companies to keep on top of.
They have 11 different managers whom the Investment Committee blend together in the trust, ensuring there isn't too much risk at a company, sector, or geographical level as well as a portfolio balance in terms of investment style. Some of the managers invest in derivatives which increases risk.
The trust is an AIC ‘dividend hero’ having increased its dividend for 58 years in a row, although that doesn’t guarantee it will continue to increase in future. In an environment where we think it will pay to be diversified, we think the trust could be an interesting option. The trust could be used for income or to bring international diversification to a more UK focused portfolio.
The trust can make use of gearing (borrowing to invest) which can magnify any gains or losses and adds risk.
JPM Emerging Markets Growth & Income
Another way that an investment portfolio might be diversified is through adding some specific investments in global emerging markets. We also feel that the re-orientation of supply chains in response to US tariff policy has the potential to benefit economies across Asia and Emerging Markets over the short to medium term.
The JPM Emerging Markets Growth & Income trust aims to achieve long term growth in capital and income by investing in high quality businesses capable of delivering long-term growth. The managers believe most investors underestimate the potential for share price growth in companies that can grow their earnings over a long period of time. This could help them buy company shares at a reasonable price and hold on to them as they grow their profits, and hopefully their share prices, over the long run.
The trust is managed by emerging markets veteran Austin Forey and John Citron. They benefit from a well-resourced team of over 100 investment professionals across nine countries, giving them eyes in most corners of the market. We think this is invaluable given the vast range of countries, cultures, and companies within their investable universe.
Emerging markets cover a diverse mix of countries. From big Asian countries like China and India, to Brazil and Mexico in Latin America, these regions offer a lot of potential as part of an investment portfolio looking for long-term growth opportunities.
But they’re all at different stages of development and have different drivers of growth.
It could take time for these markets to develop meaningfully, so the risks are greater, and investors should expect more ups and downs – a longer investment outlook is essential here.
Personal Assets Trust
In an environment where there are a lot of potential risks to consider, investing in something that actively tries to keep losses to a minimum can provide some ballast to an investment portfolio. It can also give the investor a little peace of mind. That said, even investment trusts that aim to keep losses as small as possible can lose money and so investors might get back less than they invest.
Personal Assets Trust is a great example of this type of investment trust. It aims to grow investors' money steadily over the long run, while limiting losses when markets fall. It tries to experience fewer ups and downs than the broader global stock market or a portfolio that's mainly invested in shares. We like the simple philosophy behind this trust, with the potential for long-term growth and a focus on preserving wealth in weaker markets
The trust is focused around four 'pillars', which helps to smooth out returns over time.
The first contains large, established companies that managers Sebastian Lyon and Charlotte Yonge think can grow over the long run and endure tough economic conditions. The second pillar is made from bonds, including US index-linked bonds, which could shelter investors if inflation rises, and traditional UK government bonds (gilts).
The third pillar consists of gold-related investments, including physical gold, which has often acted as a ‘safe haven’ during times of uncertainty. The final pillar is ‘cash’. This helps provide important shelter when markets stumble, but also a chance to invest in other assets quickly when opportunities arise.
The managers have the flexibility to invest in smaller companies and use derivatives, which, if used, adds risk. The trust is also concentrated, which means each investment can contribute significantly to overall returns, but it can increase risk.
Another benefit of this trust is that they apply a discount control mechanism, which means that any difference between the share price and net asset value (NAV) of the trust’s assets is actively managed. With lots of investment trusts having moved to large discounts to NAV in recent years, which has negatively impacted performance, we think this type of policy is good for investors and should help to reduce losses during any market wobbles.
Capital Gearing Trust
For a portfolio looking to diversify away from shares at the same time as trying to provide some downside protection in the face of lots of different risks, Capital Gearing Trust could be a good option.
The managers of the trust focus on preserving wealth in weaker markets. This makes the trust an interesting choice for a more conservative portfolio. It could provide diversification alongside other multi-asset trusts, or be used to provide some stability alongside more adventurous trusts or investments – though it can still fall in value.
The trust is constructed around three ‘buckets’ of assets – dry powder, risk assets and index-linked bonds.
The dry powder bucket is made up of cash, treasury bills (US government bonds) and short-dated bonds. The purpose of this section is to hold its value during volatile times or when shares and bonds are going down in price.
The risk assets section is mainly invested in company shares. This is where the trust offers differentiation from many others. Instead of investing in shares directly, the managers mainly invest in other trusts or funds. This gives them access to some specialist investments and means they can invest in other trusts that might be trading at a discount. If those discounts closed, this should add value to the Capital Gearing Trust. This section of the trust aims to provide long-term growth. It also means that the trust it highly diversified.
Index-linked bonds are the third bucket, and the managers usually invest in US Treasury Inflation Protected Securities (TIPS) or UK Index-Linked Gilts. This could provide some inflation shelter and for the trust to hold up better when markets are under stress.
Similar to Personal Assets Trust, this trust makes use of a discount control policy, which also looks to limit the difference between the trusts’ share price and its NAV.
Edinburgh Investment Trust
For portfolios focused on large US companies and/or the Artificial Intelligence (AI) theme, the UK stock market offers some potentially interesting diversification benefits. This is because the make-up of the UK stock market is quite different to the US.
The Edinburgh Investment Trust invests mainly in larger UK companies with an aim to provide a return in excess of the FTSE All Share index over the long term. The trust has a twin objective of increasing Net Asset Value (NAV) by more than the FTSE All Share index and growing dividends per share faster than the rate of UK inflation.
This approach limits the reliance on either income or capital to drive returns which could result in a smoother ride. It could therefore offer an interesting option for an income-focused investment portfolio or add exposure to larger UK companies in a broader, diversified portfolio.
The has been managed by Imran Sattar since February 2024. Sattar looks for good quality companies with resilient business models and quality management teams across the value and growth spectrum. His focus is on identifying growing companies with well-established economic moats.
Value orientated companies have performed much better than growth orientated ones in recent times in the UK. We feel valuations remain attractive, especially among some more growth orientated companies. This potentially represents an attractive entry point for investors with a long term (at least five years) time horizon. The trust is relatively concentrated, meaning that each investment could have a big impact on performance and increases risk.
The trust can make use of gearing (borrowing to invest) which can magnify any gains or losses. It also invests in smaller companies. Both the use of gearing and investments in smaller companies add risk.
