This article is part of Morningstar’s Guide to Investment Trusts, highlighting the benefits of these unique investment vehicles – busting the investment trust jargon, revealing potential pitfalls and celebrating those experienced managers who have earned the top ranking from Morningstar fund analysts.
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These three investment trusts have been rated Gold by Morningstar analysts, meaning Morningstar analysts think highly of the fund and expect it to outperform over a full market cycle of at least five years. Unlike the backward-looking Morningstar star rating, which assigns one to five stars based on a fund’s past risk- and load-adjusted returns versus category peers, the analyst rating is the summary expression of Morningstar’s forward-looking analysis of a fund.
The investment trusts we are highlighting have also been star rated with five stars, meaning it is in the top 10% of its sector ranked on a trailing three, five or 10 year basis.
Finsbury Growth & Income (FGT)
This UK equity trust features an experienced, talented, and pragmatic manager. Nick Train draws on his three decades of expertise, which cover a number of market cycles.
Having started his career as an investment manager at GT Management in 1981, he was appointed to run Finsbury Growth and Income in December 2000, just a few months after founding Lindsell Train, together with Michael Lindsell. That was a leap of faith on the part of the board, in that the newly formed firm was launched at a difficult time in markets, following the TMT-led crash, but it is a move that has paid off.
Aberdeen Asian Smaller Companies (AAS)
Morningstar analysts think the team behind this trust is one of the best in its field. Led by Hugh Young, who himself has more than 25 years of investment experience in Asian equities, it is a stable team with longevity of both experience and tenure at Aberdeen.
The team is based across the region and analysts think this is particularly beneficial when investing in smaller stocks, and the team members themselves cite it as a crucial factor in their investment approach. Company meetings pay a critical role in their process and they will not invest in any company they have not first met.
Baillie Gifford Japan (BGFD)
BGFD boasts seasoned management that has been stable since 1991, when Sarah Whitley took charge. Whitley has spent nearly 30 years investing in Japanese equities at Baillie Gifford and heads the Japanese equity team, comprising five members. It’s a specialist team that runs only Japanese equity portfolios, the majority of which are in segregated mandates.
That depth of experience has been invaluable. Whitley has invested through a variety of market conditions in Japan and this is another reason for our conviction. She has delivered solid returns for shareholders over her tenure, even when the market itself has been down or flat.
