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6 Top-Rated Investment Trusts

Find out why these six investment trusts have earned our analysts' highest accolade

Holly Cook 11 January, 2012 | 2:36PM

Morningstar launched analyst ratings for investment trusts in January 2012 and within 12 months the analyst team issued research reports and rating on roughly 100 trusts. Find out more in the article below about the first set of trusts to receive Gold ratings. To view all the latest research from the investment trust team, click here.

Morningstar today launched its qualitative, analyst-driven research and ratings for investment trusts and other closed-end funds. Initially, 32 funds have received ratings, ranging from Gold, Silver and Bronze, down to Neutral and Negative. Morningstar's closed-end funds research team aims to have 100 investment companies covered by the end of the year. In selecting which funds to rate first our analysts assess asset size, as an indicator of which funds are most commonly-held in portfolios, and demand from independent financial advisers who make sutiable recommendations to their clients.

Of the 32 research reports launched this morning, six have earned our analysts' top rating, Gold. Below are excerpts from the Morningstar research reports on the six top-rated funds--click the company name to read the full report. View all 32 reports in the Morningstar Investment Trust Quickrank. (Tip: click on the top of the Morningstar Anayst Rating column to rank from Gold down.)

BlackRock Smaller Companies Trust (BRSC)
There are many reasons that lead us to think highly of BlackRock Smaller Companies. First is the strength of its management team. Without doubt, the performance has been helped by the low fees here, too. Even with a performance fee, the fund’s total expense ratio (TER) sits around the 1% level, making it a standout competitor among peers.

BlackRock World Mining Trust (BRWM)
In our view, this fund has a strong management team whose depth of knowledge and experience in this sector is one of the best. We also like the thorough process and consistency with which it has been applied over the years. This process has translated into excellent long-term returns, but it hasn’t been a smooth ride. The TER is a little high for our liking, but not so high that it’s a detractor.

City of London Investment Trust (CTY)
There are several reasons we have such conviction in the fund. Job Curtis has been at the helm for the last 20 years—a length of tenure that’s rare to see. A TER of just 0.5% (Oct 2011) makes it highly competitive. All in, we believe the strong management, consistent process, and low fees have contributed to the excellent long-term performance, making this one of the best of its kind.

Murray International (MYI)
We think shareholders in Murray International are in good hands. This process has delivered excellent returns since it was introduced here at the start of 2001 and the board has demonstrated its commitment to an above-average dividend yield. When it comes to fees, we think the performance fee element could be improved through the addition of a high-water mark, but at least any underperformance must be made good.

Perpetual Income & Growth (PLI)
Mark Barnett has been in charge since just after the fund launched in 1996 and this consistency also applies to the process used here. Returns have been excellent, while the fund's dividend record is impressive and particularly relevant for income-seeking investors who need dependable income. All together, we think there’s much to like here.

Scottish Mortgage Investment Trust (SMT)
Scottish Mortgage Trust is a top choice for global equity exposure. With a total expense ratio of less than 0.8%, the fund is very competitive amongst its peers, both closed-ended and open-ended. This fund is ably run by an experienced manager with a proven process that has delivered excellent results—and it’s cheap.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author Holly Cook

Holly Cook  is Managing Editor of Morningstar.co.uk