I’d buy and hold these 2 global investment trusts for 100 years
Investing is a long game. You should be looking to build your investment wealth over 20, 30, 40, or 50 years, rather than just two or three. Longevity is a virtue, and the two investment trusts I’m looking at today have a track record stretching back a massive 130 years, which could make them ideal for far-sighted investors.
Foreign & Colonial
The renowned F&C Investment Trust (LSE: FRCL) was launched way back in 1868, just over 150 years ago. It’s now worth £3.66bn and aims to deliver long-term capital and income growth by investing in an internationally diversified portfolio of equities, as well as unlisted securities and private equity.
Recent performance has been good – it’s grown 99% over the past five years, against 77% for its global benchmark index. It even grew 8.8% over the last 12 months, at a time when most indices actually fell. So it isn’t just living off its history and reputation.
However, one reason for this success is its outsize exposure to the US stock market, which has beaten most others in recent years. Some 50% of the fund is invested in the States, so maybe skip this if you already have enough US exposure. Top 1o holdings include US tech giants Amazon, Microsoft, Google owner Alphabet and Facebook, so you can probably guess where recent strong growth has been coming from.
Growth is nonetheless impressive, and F&C also gives you exposure to Europe, emerging markets, Japan and the UK. The trust currently trades at a discount of 6.8% to its net asset value, giving you a cushion if markets fall further. An ongoing charges figure of 0.79% isn’t too expensive.
Your decision partly depends on where you want to put your money. The UK is relatively undervalued, for example. But F&C Investment Trust could be a good one-stop fund, if you’re happy to go large on the US.
While F&C was the original investment trust, plenty more were launched at the tail end of the 19th century, including the British Empire Trust (LSE: BTEM). It was incorporated in London in 1889 as The Transvaal Mortgage, Loan and Finance Company Limited, with the aim of investing in the hot emerging market opportunity of the period – the Transvaal colony of southern Africa, a region rich in minerals and resources.
It’s now a globally diversified investment trust with nearly £1bn in assets and now follows what investment manager Joe Bauernfreund calls a “unique strategy of investing in asset-backed companies, including holding companies, closed-ended funds, property companies and, as of June 2017, cash-rich Japanese companies.” So its top holding is Japan Special Situations, which makes up 15% of the entire fund.
British Empire Trust is also in the global investment trust sector, but is less top-heavy with US stocks. In fact, its largest exposure is to Europe, at 26%, followed by North America, at 24%, then Asia-Pacific and Japanese equities, both 18%. The UK is a measly 1% which could give you much-needed diversification from these shores. It also means that these two funds could balance each other quite nicely. Otherwise, here are two more esoteric global investment trusts to consider.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. harveyj has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, and Facebook. The Motley Fool UK owns shares of Microsoft. 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.