The election of president Trump has accelerated a rotation from 'growth' to 'value'. Which investment trusts stand to benefit?
There are two main approaches to investing: growth and value. Growth investors are prepared to buy shares in highly rated companies if they have good growth prospects, whereas value investors prefer to buy shares when companies are out of favour and are cheap.
Since the 2008 financial crisis growth investing has had the upper hand with investors bidding up shares in big, consumer goods companies providing steady, sustainable earnings. However, after last summer’s Brexit vote investors started to shift towards cheap ‘cyclical’ stocks, such as financials, that are more exposed to the ups and downs of the economy. The election of president Trump has accelerated this trend as investors hope he will boost US economic growth.
In the latest issue of Investment Trust Insider, investment experts discuss whether this rotation from growth to value will continue and highlight five investment trusts that stand to benefit.
The article also includes a table from data provider Morningstar showing the 20 investment trusts with the strongest 'value' style.