10 Best and Worst Performing Investment Trusts of 2019

Biotech Growth Trust leads the way with a 43% gain in the year to date, with three JPMorgan trusts not far behind - but which trusts have disappointed investors in 2019?

James Gard 17 December, 2019 | 9:55AM

Trophies

It’s been a record-breaking year for world stock markets and many investment trusts rated by Morningstar have comfortably beaten these stellar returns.

The best-performing closed-end fund year to date is the Silver-rated Biotech Growth Trust (BIOG) with a gain of 43% - that compares with a gain of 25% for the S&P 500.

In a year when emerging markets have lagged their developed rivals, JPMorgan funds focused on Russia on China have managed to buck the trend, making it into the top five. UK small- and mid-cap company trusts have also performed strongly after domestic stocks were boosted by the a Conservative party General Election victory.

At the other end of the spectrum, real estate investment trusts, Latin American and Asia Pacific trusts were the worst performers of the year - although most still turned in a positive return.

Best Performing

Ticker

Return %

Analyst Rating

Star Rating

Biotech Growth

BIOG

43.54

Silver

4

JPMorgan Smaller Companies

JMI

41.65

n/a

4

JPMorgan Russian

JRS

40.91

Bronze

4

JPMorgan Chinese

JMC

40.48

Bronze

5

Standard Life UK Smaller Companies

SLS

38.07

Gold

5

Mercantile

MRC

35.83

Bronze

4

Schroder UK Mid Cap

SCP

35.29

n/a

4

Fidelity Japan

FJV

35.26

n/a

4

JPMorgan Mid Cap

JMF

34.45

n/a

5

Lindsell Train

LTI

31.06

n/a

5

Biotech open-ended funds have been some of the best performing so far this year and that has been matched by their closed-end peers: Biotech Growth Trust, which has a Morningstar Analyst Rating of Silver, is our top riser with a gain of 43%, while another Silver-rated trust in the sector, Worldwide Healthcare (WWH), has posted gains of nearly 30% this year.

Four-starrated JPMorgan Small Companies (JMI), is in at number two with a gain of 41.65%. Contrary to many investors' expectations, smaller companies trusts are well represented among our list of best performers this year, led by Gold-rated Standard Life UK Smaller Companies (SLS). It is up 38% in the year to date and has benefited from the relief rally since the General Election. The trust, run by smaller companies expert Harry Nimmo, is the only one with a Gold rating in our list of the top-performers. Silver-rated Henderson Smaller Companies (HSL) is up 30%.

Elsewhere, the Bronze-rated JPMorgan Chinese Investment Trust (JMC) is up by nearly 41% despite the country posting its lowest growth in 30 years and the US-China trade war hitting sentiment in emerging markets.

The trust’s bumper year contrasts sharply with 2018, when its share price fell 25%. Its benchmark, the Shanghai Composite Index, is up this year from 2,465 points to 2,984, a gain of 21%. It hit nearly 3,300 points before the escalation of the trade war and social unrest in Hong Kong started to drag on mainland Chinese equities. China makes up 33% of MSCI Emerging Markets index, which has risen 14% this year to $1,086 – but the S&P 500 is up more than 26% in 2019.

JPMorgan Russia (JRS) is up more than 40% in 2019. Morningstar Investment Management’s latest update notes that emerging Europe as a region remains unloved by investors but “offers decent reward for risk”, especially compared with highly valued developed markets such as the US. Indeed, the MSCI Russia index is up 30% this year.

While many Russian companies, such as Gazprom and Sberbank, are still affected by US sanctions, high dividend yields and a conservatively managed economy has attracted investor flows from overseas. As an oil producer, Russia’s economy is also boosted by gains in the crude price, which spiked in September after an attack on Saudi Arabian oil facilities.

The next best Gold-rated fund outside the top 10 is Scottish Mortgage (SMT), which has had a modest year by its recent track record, gaining 21%. Nick Train’s Finsbury Growth and Income (FGT), which also has a Morningstar Analyst Rating of Gold, is not far behind with a rise of 20%. His other closed-end vehicle, Lindsell Train Investment trust (LTI), which is run with Michael Lindsell and James Bullock, is up more than 30% this year - making it into the top 10 - but sits on a hefty premium to NAV of 23%. 

Worst Performing  Trusts

Ticker

Return %

Analyst Rating

Star Rating

JPMorgan Indian Ord

JII

-1.84

Bronze

3

Fidelity Asian Values

FAS

-0.77

Bronze

4

Pacific Assets

PAC

0.23

Silver

5

Ruffer

RICA

7.17

Bronze

2

Murray International

MYI

8.11

Silver

3

Aberdeen Asian Income

AAIF

8.30

Bronze

3

Personal Assets

PNL

8.51

Gold

3

Witan Pacific

WPC

9.29

n/a

4

Invesco Asia

IAT

9.82

Bronze

5

Schroder AsiaPacific

SDP

10.27

Silver

5

The list of worst-performing trusts is dominated by those with Asia-Pacific exposure - but even the 10th worst gained 10% in the year, which in any other year would be a decent return. Outside of those trusts under Morningstar coverage, real estate investment trusts are the worst performers after a bad year for commercial property and continuing poor sentiment with the Brexit cloud still looming over the property market. 

Of the trusts rated one star or above by Morningstar, just two posted negative returns this year: JPMorgan India (JII) with a loss of 1.84% and Fidelity Asian Values (FAS) with a fall of 0.77%. 

Bronze-rated JPMorgan India is weaker this year as the euphoria surrounding the re-election of Prime Minister Narendra Modi has faded. Morningstar analyst Jan Nel praises the experience of the trust’s managers, Rukhshad Shroff and Rajendra Nair, as well as its long-term performance. “The strategy has a lot going for it, but is prone to absolute and relative volatility due to its high-conviction, concentrated nature, so investors should be patient,” says Nel.

India funds and trusts have had a strong five years since Modi was first elected but have struggled to maintain that momentum. Fund managers focused on Asia argue that investors need to look at the long-term consumer story rather than a year or so of under-performance.

Silver-rated Murray (MYI) sneaks into the top 10 worst performers, but manager Bruce Stout argues Asian economies are poised to overtake their western counterparts in the coming decade. It will be a consumption-driven story, he suggests, with rising domestic demand for products such as life insurance and holidays. Asian consumers, who traditionally are prone to high savings rates, will embrace financial products such as loans, he argues. He also sees a positive boost for domestic equities as Asian pension schemes slowly shift away from debt.

Head here for the best performing funds of the year. 

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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Biotech Growth Ord936.00 GBX-0.43
Lindsell Train Ord1,273.00 GBP-1.32
Standard Life UK Smaller Co. Ord619.95 GBX0.97
Worldwide Healthcare Ord3,170.00 GBX0.00

About Author

James Gard  is content editor for Morningstar.co.uk

Audience Confirmation


By clicking 'accept' I acknowledge that this website uses cookies and other technologies to tailor my experience and understand how I and other visitors use our site. See 'Cookie Consent' for more detail.

  • Other Morningstar Websites