Investors tend to favour experience when it comes to choosing a fund manager, the idea being that someone who has witnessed and invested through various conditions is more capable of dealing with whatever the market throws at them. 
Certainly, in times like these investors will want a fund manager with a calm head.
After all, it’s now been eight years since the global financial crisis yet economic growth is hardly robust, central bankers around the world are using ever more extraordinary monetary policies, bond yields are at record lows and political risks are mounting.
Brexit, for example, has created a multitude of uncertainties which almost guarantees heightened levels of volatility for the foreseeable future.
For those looking for experienced industry experts to look after their savings during this difficult time, data from the AIC shows that 49 per cent of portfolios in the investment trust universe have had the same manager for more than 10 years.
“It is heartening to see a significant number of investment company managers have weathered the ups and downs of the stock market. Following the referendum, in the current volatile market conditions, it’s particularly reassuring to have an experienced manager looking after your company,” the AIC’s Annabelle Brodie-Smith said.
“Investment companies can be a much ‘purer’ way to run money, because the closed-end structure means managers can take a long-term view without the worry of having to sell stock to meet redemptions.”
In this article, we look at the three management teams that have the longest track record on an investment trust (which, on average, stands at 32 years and one month). Interestingly, however, none of them could be classed as household names in the fund management terms.
Peter Spiller – managed Capital Gearing for 34.6 years
The longest serving manager in the AIC universe is Peter Spiller, who took over Capital Gearing way back in January 1982.
Spiller is renowned for his more cautious approach to the market, a multi-asset strategy that has worked very well over the longer term. Our data on the trust goes back to January 1995, and over that time Capital Gearing has returned 711.31 per cent compared to a 350.85 per cent and 300.02 per cent gain from its benchmark and sector average, respectively.
Performance of trust versus sector and index since start of data
Source: FE Analytics
Though the trust has had some tougher times of late due to Spiller’s defensive positioning (he holds 34 per cent in index linked bonds, 28 per cent in preference shares/corporate debt, 8 per cent in cash and trust 26 per cent in other investment trusts) its outperformance has come from downside protection.
It made 5 per cent during the crash year of 2008 and 3 per cent in 2011 when the European sovereign debt crisis intensified, meaning it has had the best maximum drawdown (just 15 per cent) and risk-adjusted returns in its peer group over 20 years.
Of course, given the length of Spiller’s tenure, long-term investors may be concerned about buying the trust now. However, Alastair Laing – who has worked with on the portfolio since 2011 – is set to take the role of lead manager when Spiller does eventually retire.
Capital Gearing is trading on a 0.77 per cent discount, isn’t geared and has ongoing charges of 0.97 per cent.
Simon Knott – managed Rights & Issues for 32.6 years
Next up is FE Alpha Manager Simon Knott, who has been at the helm of the smaller companies-orientated Rights & Issues Investment Trust since 1984.
Again, our data on the trust only spans back to 1995, but it shows just how well Knott – who has also managed an open-ended equivalent to the strategy since 1990 – has rewarded his shareholders over the longer term.
According to FE Analytics, the investment trust has returned a hefty 1,852.81 per cent over that time.
In comparison, the average IT UK Smaller Companies trust has made 664.54 per cent, the FTSE Small Cap index has made 297.58 per cent and the FTSE All Share has returned 294.76 per cent over the period in question.
Performance of trust versus sector and indices since start of data
Source: FE Analytics
Investors haven’t had a smooth ride in Rights & Issues, though. During the global financial crisis, its losses from peak to trough were an eye-watering 75 per cent.
However, Knott’s ability to make the most of a rising market are shown by the fact that – despite that massive drawdown – the trust has made 184.19 per cent over 10 years and has therefore beaten its average peer by 50 percentage points in the process.
Rights & Issue is a small and highly concentrated split capital trust and Knott’s largest holdings include Scapa, VP and RPC. The trust is on a 14.33 per cent discount to NAV, yields 2.2 per cent, isn’t geared and has a total expense ratio of 0.43 per cent.
Matthew Oakeshott & Angela Lascelles – managed Value & Income for 29.11 years
The final management team in this article is Matthew Oakeshott and Angela Lascelles on the Value & Income Investment Trust.
They took charge of the portfolio – which invests across UK dividend paying equities and direct property – in September 1986.
While total returns haven’t been as eye-catching as Capital Gearing and Rights & Issues over the longer term, Value & Income has beaten both the IT UK Equity Income sector and the FTSE All Share over one, three, five, 10, 15 and 20 years.
It has, however, tended to be far more volatile than the wider market over the longer term.
One of the trust’s major selling points, though, is its income credentials. Value & Income has increased its dividend in each of the past 28 years. On top of that, it has a well-covered 4.5 per cent dividend yield at this point in time.
Value & Income Investment Trust’s dividend history (in pence per share)
Source: FE Analytics
The managers currently hold 69.6 per cent of their portfolio in equities, with the likes of Legal & General, Vodafone and the John Laing Infrastructure fund occupying their top 10. A further 29.7 per cent is in direct commercial property, 40 per cent of which is high street retail properties.
Their list of largest tenants include Stonegate, Park Resorts and Iceland.
Despite its dividend track record, Value & Income is currently trading on a 17.8 per cent discount to NAV. It is highly geared at 26 per cent and has relatively high ongoing charges of 1.45 per cent.