Everyone loves a bargain, and you can even find them on the stock market.
Investment trusts can trade on discounts to what they’re actually worth, otherwise known as their net asset value (NAV), and that means there’s the potential for investors to go bargain hunting
Here are three investment trusts we think have the potential to perform well over the long term. They are run by seasoned fund managers with decades of experience of investing through all types of market conditions.
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. If you’re not sure an investment is right for you, ask for financial advice.
3 bargain investment trusts
Investing in these trusts isn’t right for everyone. Investors should only invest if the trust’s objectives are aligned with their own, and there’s a specific need for the type of investment being made.
You should understand the specific risks of a trust before investing, and make sure any new investment forms part of a diversified portfolio.
All three of these investment trusts use gearing (borrowing to invest), which magnify both gains and losses and therefore increases risk.
Finsbury Growth & Income trust
Finsbury Growth & Income Trust aims to grow both capital and income over the long term by investing in a relatively small number of high-quality UK companies.
Most of the trust is made up of large well-established companies that have strong brands or powerful market franchises.
It’s managed by Nick Train who has over 40 years’ experience investing with a distinctive quality growth style.
Train invests in companies for the long term and once invested, lets the power of compound growth get to work.
Investing in a relatively small number of companies means each holding can have a meaningful impact on overall returns, but it’s also higher risk. The trust can also invest in derivatives which adds risk.
The trust could help to diversify the UK portion of a portfolio focused on smaller companies or add UK exposure to a portfolio invested overseas.
The trust is solely invested in publicly-listed companies and therefore we think the current 8.27% discount to the trust’s NAV (at the time of writing) is both reliable and could offer an attractive entry point.
Monks Investment Trust
Monks Investment Trust aims to deliver long-term growth by investing in companies around the world, including in higher-risk emerging markets, but it’s mostly focused on developed regions like the US and Europe.
The managers invest both in large companies, but also in higher-risk smaller companies and private businesses, the latter two of which adds risk.
The trust is managed by Spencer Adair and Malcolm MacColl. Both are members of the Global Alpha team and are seasoned investors, having joined Baillie Gifford over 20 years ago.
The trust could be a building block for an adventurous investment portfolio or work well alongside other investments in unloved ‘value’ companies with recovery potential.
The trust trades at a 9.88% discount to its NAV (as of the time of writing).
JPMorgan Emerging Markets Trust
The JPMorgan Emerging Markets trust aims to deliver long-term growth by investing in growing businesses across a diverse range of emerging economies like China, India, Taiwan, and Korea.
They invest in high-quality companies, with sustainable growth prospects, and hold them for the long term.
Austin Forey, a seasoned and talented emerging markets investor, has managed this trust since 1994. He’s supported by John Citron who joined JPMorgan in 2009 and has experience working across both the European and Emerging Markets Asia Pacific Equities teams.
While emerging markets offer lots of opportunity, they’re also higher risk and typically more volatile than developed markets. The trust could complement more value-orientated Asia and emerging market investments. It could also be blended with other investments that mainly invest in developed markets.
The trust can invest in smaller companies and derivatives which adds risk.
The trust trades at a 7.96% discount to its NAV (as of the time of writing).