Moneywise First 50 Funds - investment trusts
See our 50 first funds for beginners homepage for links to the other funds in the list.
However, many investors love investment trusts for their tendency to perform better than actively managed open-ended funds. Here are a few to consider buying and stashing away for the long term.
Investment trusts are identified by their TIDM (which stands for Tradeable Instrument Display Mnemonics), a short, unique code, used to identify UK-listed shares. We've also included the annual ongoing charges figure (OCF) for each trust.
UK stock market income
City of London Investment Trust (CTY)
A core holding for investors looking for long-term growth in income and capital from UK shares. Very low charges and a lower-risk, cautious investment style. Read full profile.
Finsbury Growth and Income (FGT)
Its aim is to provide income and growth by investing primarily in UK-listed companies. Manager Nick Train’s long-term patience and deep understanding of his companies set him apart from his peers. Read full profile.
UK stock market growth
Henderson Smaller Companies (HSL)
Seeking to maximise shareholder total returns by investing mainly in UK smaller companies, its manager Neil Hermon has built up an impressive record of capital growth and dividend increases. Read full profile.
Global stock market growth
Scottish Mortgage (SMT)
Aims to maximise total return, while also generating real dividend growth, from a focused and actively managed global portfolio, with a focus on the theme of technological change. In March 2017 it was promoted to become a member of the FTSE 100 index. Read full profile.
F&C Global Smaller Companies (FCS)
Aims for a high total return by investing in smaller companies worldwide. The dividend has risen in each of the past 45 years. Read full profile.
Witan Investment Trust (WTAN)
A good core portfolio holding, it invests in global equities and is managed via a multi-manager strategy, which means it invests in other funds. Read full profile.
Jupiter European Opportunities (JEO)
Fund manager Alexander Darwall has proved to be an exceptional stock-picker. He invests in a focused portfolio of around 40 stocks and favours high-quality European businesses. Read full profile.
Global stock market income
Murray International (MYI)
Its goal is to achieve income and capital growth through investments predominantly in worldwide equities. Fund manager Bruce Stout is a ‘contrarian’ investor (he takes the opposite view to other investors). Read full profile.
F&C Managed Portfolio Income (FMPI)
Generating income from a diversified portfolio of investment trusts and investment companies, it offers a good way to test the water in this sector. Read full profile.
F&C Commercial Property Trust (FCPT)
Investing in a diversified UK commercial property portfolio, it aims to provide an attractive level of income together with the potential for capital and income growth. Read full profile.
The term is interchangeable with stock exchange, and is a market that deals in securities where market forces determine the price of securities traded. Stockmarket can refer to a specific exchange in a specific country (such as the London Stock Exchange) or the combined global stockmarkets as a single entity. The first stockmarket was established in Amsterdam in 1602 and the first British stock exchange was founded in 1698.
Investment trusts are companies that invest money in other companies and whose shares are listed on the London Stock Exchange. As with unit trusts, private investors buying shares in an investment trust are buying into a diversified portfolio of assets (to reduce risk), which is managed by a professional fund manager. Investment trusts differ from unit trusts in two important ways: they are listed on the stockmarket and so are owned by their shareholders and are closed-ended funds with a finite number of shares in issue. This means the share price of investment trusts might not reflect the true value of the assets in the company (known as the net asset value, or NAV) and if the NAV value of a share is £1 and the share price in the market is 90p, the trust is said to be running a discount of 10% to NAV. But this means the investor is paying 90p to gain exposure to £1 of assets. Investment trusts can also borrow money and use this money to buy investments. This is known as gearing and a geared trust is thought to be more of an investment risk than an ungeared one.
A market-weighted index of the 100 biggest companies by market capitalisation listed on the London Stock Exchange. It is often referred to as “The Footsie”. The index began on 3 January 1984 with a base level of 1000; the highest value reached to date is 6950.6, on 30 December 1999. The index is “weighted” by how the movements of each of the 100 constituents affect the index, so larger companies make more of a difference to the index than smaller ones. To ensure it is a true and accurate representation of the most highly capitalised companies in the UK, just like football’s Premier League, every three months the FTSE 100 “relegates” the bottom three companies in the 100 whose market capitalisation has fallen and “promotes” to the index the three companies whose market capitalisation has grown sufficiently to warrant inclusion. Around 80% of the companies listed on the London Stock Exchange are included in the FTSE 100.
An interchangeable term for shares (UK) or stocks (US). Holders of equity shares in a company are entitled to the earnings and assets of a company after all the prior charges and demands on the company’s capital (chiefly its debts and liabilities) have been settled. To have equity in any asset is to own a piece of it, so holders of shares in a company effectively own a piece proportionate to the number of shares they hold. (See also Shares).
If you own shares in a company, you’re entitled to a slice of the profits and these are paid as dividends on top of any capital growth in the shares’ value. The amount of the dividend is down to the board of directors (who can decide not to pay a dividend and reinvest any profits in the company) and they will be paid twice yearly (announced at the AGM and six months later as an interim). Dividends are always declared as a sum of money rather than a percentage of the share’s price. Although dividends automatically receive a 10% tax credit from HM Revenue & Customs (HMRC), which takes the company having already paid corporation tax on its profits into account. Dividends are classed as income and, as such, are liable for personal taxation and so shareholders have to declare them to HMRC.
An individual employed by an institution to manage an investment fund (unit trust, investment trust, pension fund or hedge fund) to meet pre-determined objectives (usually to generate capital growth or maximise income) in prescribed geographic areas or investment sectors (such as UK smaller companies, technology or commodities). The manager also carries the responsibility for general fund supervision, as well as monitoring the daily trading activity and also developing investment strategies to manage the risk profile of the fund.