Best and Worst Investment Trusts of 2020

We look at the best and worst performing investment trusts with a Morningstar Analyst Rating after an unprecedented year

Holly Black 5 January, 2021 | 9:13AM
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In an unprecedented year for global stock markets, investment trust managers certainly had their work cut out. 2020 was a year of highs and lows, with tech stocks soaring and oil firms tanking, and the same deep chasm was evident between the best and worst performing funds of the year.

We looked at the performance of investment trusts with a Morningstar Analyst Rating and while the top performer would have more than doubled your money in 2020, investors in the worst performers are nursing losses of up to 25%.

Top Performing Investment Trusts of 2020

Few investors will be surprised to see James Anderson’s £17.5 billion behemoth Scottish Mortgage (SMT) investment trust at the top of the pile, having achieved gains of 107.46% in its share price. The Silver-rated trust is known for its large stakes in disruptors and its penchant for tech stocks, areas which thrived amid a world of lockdowns, home-schooling and remote working. 

Some 10% of the trust’s assets are invested in electric car maker Tesla, whose shares soared an incredible 700% in the year. The rest of its top 10 holdings list is also decidedly well-placed to benefit from the Covid-19 era, including the likes of e-commerce giants Amazon (AMZN) and Alibaba (BABA), fast food app Delivery Hero (DHER) and biotech outfit Illumina (ILMN). And while 2020 was undoubtedly a strong year for the trust, its longer-term track record is no different, with annualised returns of 25.35% over 10 years.

James Budden, director of marketing and distribution at Baillie Gifford, said: “Scottish Mortgage and Edinburgh Worldwide saw spectacular rises in their respective share prices during 2020. All this makes sense once one examines the effects of lockdown measures – more e-commerce, more food delivery, more online entertainment, more online communication for work and school, an emphasis on healthcare and more computing power required to make this all work. These themes are well represented within stocks held by our trusts."

Name  1 Year Ret (%) Morningstar Category Analyst Rating
Scottish Mortgage 107.46 Gbl LgCap Gwth Equity Silver
Edinburgh Worldwide 86.44 Gbl Sm/Mid Cap Equity Silver 
JPMorgan China Gwth & Income 82.90 China Equity Silver 
JPMorgan Japanese  44.03 Japan Large-Cap Equity Silver 
Monks 40.71 Gbl LgCap Gwth Equity Silver 
Montanaro Eur Smaller Cos 40.03 Eur ex-UK Sm/Mid Eq Bronze 
Schroder Asian Total Return 33.73 Asia Pac ex-Jap Equity Gold 
Schroder Asia Pacific 32.21 Asia ex-Japan Equity Bronze 
Aberdeen New Dawn 26.56 Asia Pac ex-Japan Eq Bronze 
Asia Dragon 25.79 Asia ex-Japan Equity Bronze 

Source: Morningstar Direct, Data to December 31, 2020. Price return basis

Smaller companies were not investor favourites in 2020, but Montanaro European Smaller Companies (MTE) makes it on to the top performers list all the same, with a return of 40% for the year. With more than half of the trust’s assets split between technology and healthcare stocks, it has been able to buck the trend, beating its benchmark and category average by a significant margin.

Some six of the top 10 performers in our list have an Asian focus, including JPMorgan China Growth & Income (JCGI), Schroder Asian Total Return (ATR), and Aberdeen New Dawn (ABD). The region, and particularly China, was hard hit at the outbreak of the pandemic but came out of lockdown and started to recover more quickly than the West. The region received a further boost from the victory of Joe Biden in the November’s US Presidential Election, sparking hopes of better relations between the US and China in the near future.

Worst Performing Investment Trusts of 2020

Some seven of the worst performing trusts with a Morningstar Analyst Rating are UK focused. Stuck under a Brexit cloud, the UK has been firmly out of favour with investors for years, and the coronavirus pandemic did little to change minds. Former dividend darlings in the oil and banking sector provided further disappointment for domestic investors in 2020 as many were forced to cut their dividends.

Temple Bar (TMPL) is the worst performer on our list, down a hefty 25.85% in the year. Morningstar analysts downgraded the trust to a Neutral rating after its manager Alastair Mundy took an extended leave of absence due to health reasons. RWC Partners took over the management of the trust in October 2020 from Ninety One (formerly known as Investec). Morningstar analyst Samuel Meakin said at the time of the downgrade: “The continuity he provided was an important factor in our ongoing conviction. Additionally, some question markets over aspects of portfolio construction have reduced our overall conviction relative to other UK value strategies.” Top holdings include easyJet (EZJ), which has been hit by lockdowns and reduced travel across the globe, and IWG (IWG), whose subsidiary Regus, a service office provider, filed for bankruptcy in September. 

Other value strategies, including Lowland investment trust also found themselves in the worst performers list. Laura Foll, co-manager of Lowland Investment Trust, said the trust's exposure to small and mid-sized companies in a year when UK economic growth had experienced a double-digit contraction had hurt performance. She said: "Since the end of September, the turst has materially outperformed its FTSE All-Share benchmarket as more cyclically exposed stocks and sectors that had previously detracted from perormance have begun to redcover following positive vaccine news." 

 Name 1 Year Ret (%) Morningstar Category Analyst Rating
Temple Bar  -25.85 UK Flex-Cap Eq Neutral
Aberdeen Std Equity Income -17.48 UK Equity Income Bronze
City of London -13.24 UK Equity Income Gold
Lowland -13.05 UK Flex-Cap Eq Bronze
Edinburgh Investment -10.95 UK Lge-Cap Equity Bronze
Troy Income & Growth -9.31 UK Large-Cap Equity Silver
Fidelity Special Values -8.69 UK Flex-Cap Equity Silver
JPMorgan Russian Secs -6.89 Russia Equity Bronze
European Opportunities -6.15 Eur Large Cap Growth Equity Silver
TR Property -2.80 Property Indirect Europe Silver

Source: Morningstar Direct, Data to December 31, 2020. Price return basis

Outside of the UK, the JPMorgan Russian Securities (JRS) trust found itself in the list of weakest performers, with a loss of 6.89% for the year. The country’s index is dominated by commodities companies, which were hit hard by a collapse in the oil price - indeed, the trust has almost a quarter of its assets in the energy sector with Lukoil and Gazprom among its largest holdings.

And the Silver-rated TR Property (TRY) trust takes last spot in the table, with a loss of 2.8% in the year. The investment trust invests in real estate companies across Europe, a sector which has seen mixed performance: while warehouses and logistics centres have been in high demand from the soaring popularity of online shopping, retail and office space have been among the victims of nationwide lockdowns. TR Property invests in UK self-storage firm Safestore Holdings (SAFE), Swedish construction company Fabege (FABG), and French firm Gecina Nom (0OPE), an office and residential property real estate company.

Investment Trusts in December

The best performers list for December featured many of the same names as those that topped the performance table for 2020 as a whole. Edinburgh Worldwide (EWI) returned just shy of 11% in the month as value stocks enjoyed a rout. That trend also put Fidelity Special Values (FSV) in the top performers list for December, up 8.24% in the month - not enough to keep it out of the laggards list for the year as a whole, though. 

Optimism ahead of a new US President was also evident in the number of Asia and China focused funds which outperformed in the month, with JPMorgan China Growth & Income gaining 9.62% in December, Asia Dragon (DGN) 7.41%, and Schroder Asia Pacific (SDP) 6.95%. 

JPMorgan Japanese (JFJ) and Baillie Gifford Japan (BGFD) were the weakest rated investment trusts in the final month of the year, the former losing 0.48% in the month and the latter up a marginal 0.14%. The rest was a mixed bag, with the worst performers of December list featuring two European trusts - Henderson European Focus (HEFT) and Fidelity European (FEV) - as well as two global trusts, F&C Investment Trust (FCIT) and Bankers (BNKR). 

 

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.

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About Author

Holly Black  is Senior Editor, Morningstar.co.uk