Whether you think the battered European and Japanese markets are due a rebound, or are waiting for a significant fall in the rejuvenated US market, it is worth keeping an eye on trusts trading on a discount across the small and multi-cap developed equity sectors – particularly those run by highly rated managers.
Alexander Darwall – 6.9 per cent
The FE Alpha Manager’s Jupiter European Opportunities trust is the standout portfolio in its IT Europe sector, topping it over one, three, five and 10 years.
According to FE data, it has returned 328.47 per cent compared with 102 per cent from its FTSE World Europe ex UK benchmark.
No open-ended European fund has come anywhere close to matching this performance over 10 years.
Performance of trust vs sector and index over 10-yrs
Source: FE Analytics
Although it has been a particularly difficult time for European markets of late, the Jupiter European Opportunities trust has managed to deliver 43.39 per cent over five years and 115.34 per cent over three – again, significantly more than its sector and benchmark.
While its stellar record and reputation have led to the trust being on a smaller discount than most of its peers, at 6.9 per cent below NAV it still offers good value for anyone interested in investing in Europe.
Unlike the open-ended version of the fund, the Jupiter European Opportunities trust has significant exposure to the UK, holding the likes of Johnson Matthey and Experian in its top-10 holdings.
The FE five crown-rated trust has a total expense ratio (TER) of 0.94 per cent. Darwall has headed up the portfolio since 2000.
John MacDougall – 5.8 per cent
Japan is being tipped by a number of global managers to shine following more than 20 years in the investment wilderness. Cheap valuations, strong corporate balance sheets, and the government’s pledge to weaken the currency and increase inflation all bode well for the Japanese markets.
Baillie Gifford Shin Nippon trust, managed by John MacDougall since May 2007, is the standout performer in the IT Japan and IT Japanese Smaller Companies sectors of recent years.
It is the only trust across the two sectors that has managed to break even over five years; indeed, it returned 17.86 per cent, which is a full 18 per cent more than its closest rival, Baillie Gifford Japan.
Performance of trusts over 5-yrs
| Name | 1-yr returns (%) | 3-yr returns (%) | 5-yr returns (%) |
| Baillie Gifford Shin Nippon IT | 13.86 | 74.27 | 17.86 |
| Baillie Gifford Japan Trust | 6.99 | 32.44 | -0.38 |
| Schroder Japan Growth IT | 4.19 | 17.57 | -8.18 |
| JP Morgan Japanese IT | -2.76 | 10.59 | -17.37 |
| Atlantis Japan Growth IT | 4.85 | 25.57 | -17.5 |
| Fidelity Japanese Values IT | -6.1 | 1.01 | -19.03 |
| JP Morgan Japan Smaller Companies Trust | -4.72 | -0.55 | -35.81 |
| Prospect Japan IT | 11.12 | 53.14 | -48.05 |
Source: FE Analytics
Over three years, its dominance is even greater; according to FE data, it has delivered 74.27 per cent, beating its closest rival by more than 30 per cent. It is also number-one in the sector over one year.
The trust sits in IT Japanese Smaller Companies, and uses MSCI Japan Small Cap as its benchmark. It has fallen slightly short of the index over five years, but beats it comfortably over one and three.
As of 31 July, the £69m trust was trading on a discount of 5.8 per cent. It has a TER of 1.55 per cent.