It’s almost Christmas and before we retire for our obligatory sherry and mince pies at Armchair headquarters, we thought we’d take another look at the investment trust sector and five of the investment trusts which really shot the lights out in 2020. It was a tough year for fund managers, with the pandemic really starting to impact markets from February onwards. Portfolio managers won’t be forgetting 2020 in a hurry.
So here’s our list for the investment trusts that really hit it out of the park in 2020.
The Baillie Gifford US Growth [ LSE:USAB ] trust has really capitalised on the massive boom market in US and Canadian stocks, generated by the Federal Reserve basically turning on the quantitative easing taps and printing dollars non-stop. The fund has ridden the wave, with Tesla up there as its top holding in August, with a 13% allocation. By October the managers had cut that to 8.6%, which was prudent. The trust has really smashed it this year, leaving the turbo-charged S&P 500 in its dust. Allocations to the likes of Amazon, Shopify and Zoom Video Communications have done their bit to power the fund to a gain of 129% over 12 months.
Scottish Mortgage [ LSE:SMT ] is a big favourite with our readership – and our editorial team – and no surprise to see this one doing well yet again in 2020. Scottish Mortgage is a bit of a banker really, with a global equities mandate. Like the Baillie Gifford fund above, the managers are in Tesla and Amazon (who isn’t these days?) but have also been very bullish on Chinese stocks, like Tencent, NIO and Alibaba. If there is anything to signal that China has arrived in mainstream investment, it’s seeing three of the top five stocks in Scottish Mortgage from China. Scottish Mortgage had an excellent year, up 120% over 12 months.
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Asia Pacific has been a great market to be in this year: thanks to better management of the pandemic, economies like China and Korea were already back into growth mode in the summer months, with China also shrugging off concerns about a trade war with the US. Pacific Horizon Investment Trust [ LSE:PHI ] led this group with its strong Asia-based strategy. It also has four private companies in its portfolio. Unlike more conventional trusts, it has gone with an eclectic collection of Asian stocks, among them SEA Ltd and JD.com. Samsung, at 3.1% of the portfolio, and Alibaba (2.5%) are also in there. The fund is managed by Baillie Gifford’s Ewan Markson-Brown, and has potential gearing of up to 6%. It brought in over 106% in the last 12 months.
Golden Prospects Precious Metals Ltd [ LSE:GPM ] is a trust from CQS that is managed by Keith Watson and Robert Crayfourd and focused on mining companies. They have a mix of explorers, developers and producers in their portfolio, with a strong bias towards gold, although nice to see considerable exposure in silver as well. Top holdings include West African Resources and Mag Silver Corp. The fund is 65% allocated to producers and looks very well positioned to benefit from any upside moves in bullion prices next year, although has delivered +99.3% over 12 months. This is a good diversifier as it is not going to be in Tesla and Amazon like everyone else, for starters! We like the team at CQS, having written about them in a previous life at The Hedge Fund Journal.
Sector-wise, technology has been the dominant theme in 2020; performance will be hard to beat next year. Leading the tech sector specialists is Allianz Technology Trust Plc [ LSE:ATT ], another top performer which has a huge following among private investors and IFAs in the UK. Allianz Technology has just over £1bn in assets under management and returned 80.2% during the time period I’m looking at. It is a very focused technology play if that is what you are after, but notice the overlap with many of the other funds mentioned in this article: Amazon? Check. Tesla? Check. Alibaba? Check. Zoom? Check. You get my drift. You may end up thinking you are diversifying your portfolio, but you would be taking on a lot of concentration risk in about six or seven technology sector stocks. Be careful out there.