07 Jan My top 2 ‘growth’ investment trusts for 2018
Investment trusts are great vehicles for making money from the stock market, requiring minimal effort from investors and diversifying your money across multiple assets. For those looking to switch from one investment strategy to another in the New Year, the wide range of trusts can help you to quickly move into new areas as economic and market circumstances change.
There are many investment themes to look out for in 2018, and one that you have probably heard of on multiple occasions is the revival in European economic growth. 2017 was a euphoric year for most European economies, with the Eurozone’s economic growth rate even outstripping that of the United States. Looking ahead, a number of investment analysts reckon a continued recovery would help domestically exposed stocks in the region.
With this in mind, I believe the Jupiter European Opportunities Trust (LSE: JEO) is a fund to consider for investors looking to get more exposure to European equities. Alexander Darwall, who has managed the fund since November 2000, has proved himself to be an exceptional stock-picker, with the fund regularly delivering returns in excess of its investment trust peers.
Over the past five years, it has delivered a total net asset value (NAV) return of 119%, beating the peer average return of 99% and benchmark FTSE World Europe excluding-UK Index’s performance of 88%.
Fund manager Darwall takes into account economic and business trends to find stocks which offer good prospects for capital growth. Industrials dominate its portfolio, with a 35% sector weighting, and this is followed by consumer services (21.7%) and healthcare (21.7%).
Top holdings include Wirecard (14.7%), Relx (9.9%), Novo Nordisk (9.1%), Carnival (7.4%), and Amadeus IT Group (6.9%).
Another area worth taking a look at is the mining sector. There’s growing confidence that corporate investment will finally pick up this year, especially following strong global growth and recent US tax changes that create enhanced deductions for capital expenditures. An uptick in corporate investment, along with rising infrastructure spending, should enable commodity prices to make headway in 2018.
The BlackRock World Mining Trust (LSE: BRWM) offers investors a diversified play on the mining sector, with balanced exposure across all major sub-sectors of the mining sector. Although there are a number of diversified large-cap miners listed on London Stock Exchange, this fund also offers exposure to companies such as Canada’s First Quantum Minerals Ltd, Brazilian iron ore miner Vale and a large number of smaller players, giving investors much broader exposure to the market.
Another attraction is that shares in the investment trust trade at a big discount to its NAV. With the shares currently trading at a 14% discount to its NAV, prospective investors have the opportunity to pick up shares in a trust for less than the sum of its parts. They’re able able to buy a pound’s worth of its assets for just 86p, a big discount for a portfolio consisting mainly of some very liquid equity investments.
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Jack Tang has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.