3 Global Equity Funds That Beat the Odds

Foreign & Colonial Investment Trust increased net assets by 5.1% during the first six months of 2012. Find out about the other two winners.

Szymon Idzikowski 1 August, 2012 | 12:27PM

Britain’s oldest investment trust, the Silver-rated Foreign & Colonial Investment Trust (FRCL), just announced it increased net assets by 5.1% during the first six months of the year. This increase was no easy feat considering the current challenging market conditions.

F&C’s chairman Simon Fraser explained that the investment trust’s performance was boosted by its private equity holdings, which account for almost 19% of the portfolio. Meanwhile, listed companies, which continue to increase their dividends, also gave the investment trust a boost.

This investment trust is a compelling choice for investors because it has not only performed well in the last six months, but it has reported solid returns over the long term.

Managed consistently by Jeremy Tigue since 1997, F&C has comfortably beaten its peers in the Morningstar Global Large-Cap Blend Equity category over the last one, three, five and 10 years. These returns have been achieved with risk kept in check, and that’s despite the use of gearing.

Meanwhile, there are two other investment trusts in this category that have also been reporting impressive returns over the short and long-term.

The globally-focused, Silver-rated Law Debenture (LWDB) has delivered a strong performance year-to-date and over the longer term. One of the attractions here is the talented fund manager, James Henderson. Even though he has officially been at the helm of the fund since June 2003, he has been involved with Law since 1994 and has been running closed-end funds since 1990. This industry record gives him a good understanding of investment trusts and their nuances compared with other vehicles. We also like the consistency and stability that his tenure brings, which has been reflected in his fund’s performance. Henderson’s fund has returned nearly 12% on an annualised basis since his appointment, compared with the category average of 5.5%. However, investors should keep in mind that in the last few years, the fund has had a rather bumpy ride: standard deviation, a statistical measure of risk, is significantly higher for Law compared to its peers. This risk and volatility might be too much for a more cautious, jitter-prone investor.

One fund that cannot be missed when discussing global equity investing is the Gold-rated Murray International Investment Trust (MYI). The fund benefits not only from a strong manager, Bruce Stout, but also from the expertise of the whole Aberdeen Global Equities team, which is also involved in managing the investment trust.  

The team follows a firm-wide process that's tried and tested across all of Aberdeen's equity funds. This process focuses on the quality of different companies and their valuations and has delivered excellent returns since it was introduced in 2001 and since Stout’s official appointment in June 2004. The fund has managed to lose less than its peers in down markets: Its Morningstar Risk-Adjusted Return over five years shows a loss of just 2%, compared with the category’s 8.6%. 

Diversification is seen by many as a logical approach to investing right now, especially with the on-going uncertainty surrounding Europe, combined with forecasts for a slowdown in both China and the US. The funds mentioned are all well diversified, with their managers searching for the best opportunities around the globe. This approach has paid off not only in 2012, but also over the longer term.

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 Szymon Idzikowski

Szymon Idzikowski  is a closed-end fund analyst with Morningstar.