Adviser recommendations for millennials, mid-life investors and retirees.
With just over a month until the end of the tax year, time is running out for investors to make the most of this year’s £20,000 ISA allowance. Investment companies offer strong long-term performance, income benefits and exposure to a wide range of assets, but with over 300 to choose from, how should investors make their selection?
The Association of Investment Companies (AIC) has asked financial advisers and wealth managers for their investment company recommendations for millennials, mid-life investors and retirees.
Tomiko Evans, Chief Investment Officer and Managing Director at Crossing Point Investment Management, said: “Investment companies offer a unique range of investment opportunities and fantastic returns. We run four diversified, risk-rated investment trust model portfolios which can be matched to a client’s risk appetite and life stage. We pick funds based on criteria including performance, gearing, discounts, charges, financial ratios, and the diversification of underlying funds. A few funds which we would recommend for a young millennial just starting out with a longer-term investment horizon would be Scottish Mortgage Investment Trust and Edinburgh Worldwide Investment Trust, both of which have impressive track records and are global funds for diversification. Edinburgh Worldwide invests in global small cap companies and is slightly more volatile but has provided excellent long-term returns.”
Philippa Maffioli, Senior Adviser at Blyth-Richmond Investment Managers, said: “I have always been an advocate of young people building the foundations of their investment portfolio via monthly contributions and I often recommend Templeton Emerging Markets Investment Trust. Chetan Sehgal is an experienced manager who took the helm in 2018. Exposure to this investment trust provides long-term capital appreciation through investment in companies operating or listed in emerging markets, thus providing interesting international exposure with a strong bias towards technology.”
Paul Chilver, Associate and Financial Planning Manager at Birkett Long, said: “Many think of millennials as younger investors. However, someone like myself who fits this description is now closer to forty than thirty! Despite this, when looking at investment trust suggestions for this demographic you can still look on the longer-term horizon and therefore accept in most instances a greater degree of risk and volatility. The first investment trust I would suggest for this type of investor would be Templeton Emerging Markets Investment Trust which after a few years of strong performance is still available at an attractive discount of around 7%. Japanese equities have also been in the news recently due to the Nikkei reaching 30,000 points for the first time in over 30 years and my next trust is in the Japanese Smaller Companies sector. It is the investment trust managed by Baillie Gifford – Baillie Gifford Shin Nippon – which, although volatile, has recently provided strong returns.”
Saftar Sarwar, Managing Director and Chief Investment Officer at Binary Capital Investment Management, said: “Keystone Positive Change is an investment trust looking to invest in future global growth investment opportunities which aim to deliver real change to society now and into the future. This is the choice for you if you are an investor seeking an innovative trust to hold for long-term growth, whilst contributing towards a more sustainable and inclusive world by investing in companies whose products or services make a positive social or environmental impact.”
Philippa Maffioli, Senior Adviser at Blyth-Richmond Investment Managers, said: “I recommend Invesco Perpetual UK Smaller Companies Investment Trust across my client base, but I am keen on it for those enjoying middle age as it aims to provide a long-term total return by investment in a broad cross-section of small to medium sized UK quoted companies. I like that it is actively managed and is not constrained by a benchmark. As my clients move towards retirement, the yield is attractive although I do recognise that dividends can be enhanced by making use of its ability to distribute capital profits.”
Paul Chilver, Associate and Financial Planning Manager at Birkett Long, said: “My first investment trust is one I have mentioned in the past, the BlackRock Greater Europe Investment Trust. It has an all-cap approach and appears to be well positioned for potential growth opportunities in European equities. My next suggestion is closer to home and hoping to take advantage of the potential upturn in UK equities which have been out of favour and seen as undervalued for some time. I am suggesting a trust focused on smaller companies, the River & Mercantile UK Micro Cap Investment Trust which could be well positioned to take advantage of a more positive outlook for UK equities.”
Tomiko Evans, Chief Investment Officer and Managing Director at Crossing Point Investment Management, said: “For a middle-aged client, we would suggest Monks Investment Trust as a global fund for diversification with a moderate amount of volatility and fantastic medium to long-term returns.”
Saftar Sarwar, Managing Director and Chief Investment Officer at Binary Capital Investment Management, said: “The Scottish Mortgage Investment Trust provides genuine active exposure to high-growth public and private companies at a low cost. The managers take a bottom-up, stock picking approach with a high conviction style. It is a trust with a focus on the US and China around technology, healthcare and disruptive investments. Scottish Mortgage is a trust for investors who want to capture future growth opportunities and real innovation – and who want to take a ten-to-fifteen-year view on investing.”
Saftar Sarwar, Managing Director and Chief Investment Officer at Binary Capital Investment Management, said: “The Ruffer Investment Company is interesting for someone who is looking for steady capital growth without too much volatility. It is a capital preservation trust that should generate positive returns in most markets. The trust can invest in bonds, equities and other strategies to mitigate potential market falls and even has an allocation to gold.”
Philippa Maffioli, Senior Adviser at Blyth-Richmond Investment Managers, said: “I recommend Civitas Social Housing REIT because it provides both an excellent yield and it is wonderful for diversification. I like it because it comprises a large diversified portfolio of built, principally freehold social homes within the regulated social housing sector across the UK. It benefits retirees because of the stable income from the receipt of rents with the potential for capital uplift. It is attractive because long-term lease agreements are signed only with housing associations and local authorities (‘Registered Providers’). Finally, the most important feature is the company’s overriding philosophy: promoting tenants’ wellbeing, enhancing housing quality and delivering an increase in the stock of regulated social housing.”
Tomiko Evans, Chief Investment Officer and Managing Director at Crossing Point Investment Management, said: “For a retiree, we would consider Mid Wynd International Investment Trust as it is a global fund for diversification, has had a relatively low amount of volatility and still provides income and continued growth.”
Paul Chilver, Associate and Financial Planning Manager at Birkett Long, said: “Here I would look at investment trusts paying a decent income. Firstly a ‘steady Eddie’ type investment trust which is the Dunedin Income Growth Investment Trust, currently yielding just over 4% and which has recently performed consistently. My second suggestion is moving away from UK large caps and therefore blends well with the Dunedin Income Growth Investment Trust: the Montanaro UK Smaller Companies Investment Trust which is currently yielding just over 3.5%. This has been managed for quite some time by Charles Montanaro.”
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Notes to editors
- The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 360 members and the industry has total assets of approximately £234 billion.
- Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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