Skip to the content

The top performing investment trusts over the year to date

03 October 2016

Commodity price rises and a resurgence in the emerging markets have been influential in the top investment trusts of 2016, according to FE Analytics.

By Jonathan Jones,

Reporter, FE Trustnet

A resurgence in commodity prices and a flight to ‘risk-off’ assets have been a common theme so far this year in the closed-ended fund space, according to data from FE Analytics. 

Political issues such as the Brexit vote in June, the upcoming referendum in Italy and the general election in America, as well as a slow growth world have all left investors scrambling for security.

This rise in uncertainty has led many investors to buy ‘safe havens’ such as precious metals, which had been on an awful run over the last few years.

Gold has performed particularly well so far in 2016, rising 40.96 per cent having fallen from grace over the last few years.

This is in part due to the uncertainty and political factors above, but also as a result of extremely loose monetary policy globally making the opportunity cost of holding gold low.

With interest rates around the world being kept low, gold - a non-yielding asset - is more attractive than it would be if cash was providing decent returns to investors.

Looking over the year so far it is somewhat unsurprising therefore that the best performing investment trust has been focused on gold equities: New City Investment Managers’ Golden Prospect Precious Metal.

So far in 2016, the trust is up 157.33 per cent, beating the gold price and the IT Commodities and Natural Resources sector, which gained 53.83 per cent.

Performance of trust and gold spot in 2016

 

Source: FE Analytics

The investment trust is predominantly invested in miners, with largest holding Toronto-listed gold miner Klondex Mines, joined by Canadian small cap miners Mandalay Resources and West African Resources in its top five holdings.

The fund has 52 per cent exposure to gold and 35 per cent to silver through its holdings in the miners.

Smaller miners tend to be more affected by the changes in commodity prices as they typically focus on one area or project as they do not have the capital to diversify in the same way as their larger peers.

With added pressure on cutting costs in the wake of a slumping gold price in recent years, these companies will benefit more from a rise in commodity prices as evidenced by Mandalay Resources, which is up 56 .25 per cent year-to-date, West African Resources (ahead 438.46 per cent) and Klondex mines (up 166.43 per cent).


This theme of commodities and investors fleeing risk is prevalent among the top performing investment trusts in 2016 so far, as the table below shows.

Among the top 16 investment trusts of 2016 so far, other commodity trusts include BlackRock World Mining, Baker Steel Resources Trust and City Natural Resources Hight Yield Trust, to go along with top performer Golden Prospect Precious Metal.

Performance of top performing investment trusts in 2016

 

Source: FE Analytics

Another theme among the top performers is the resurgence in emerging markets, with JP Morgan Brazil and Russian Securities returning 68.40 per cent and 51.99 per cent respectively.

This has been in part due to the commodity shift mentioned above, with Brazil a predominantly mining-focused economy. Meanwhile, Russia, which produces a lot of oil, has benefited from a 51.17 per cent rise in the price of Brent crude so far in 2016.

However it is also due to investors looking to avert risk, with some now suggesting emerging markets are being seen as less risky.

iShares’ Wei Li, for example, said: “Emerging markets are actually somehow ‘perceived to be safer than their developed market counterparts’ because they are a bit further from developed market driven volatility factors.”

With issues surrounding the emerging markets beginning to subside and uncertainty building in the more developed countries, such as in Europe and America, parts of the emerging markets have been boosted in 2016.


Among the most surprising in the list is the UK-focused Chelverton Growth Trust, which is up 131.96 per cent year-to-date.

Despite the Brexit vote causing much panic among investors, particularly in the small-cap space where the trust focuses, it has returned 131.96 per cent so far this year, 119.58 percentage points ahead of the FTSE All Share and 129.31 percentage points ahead of the IT UK Smaller Companies sector.

Performance of fund vs sector and benchmark in 2016

 

Source: FE Analytics

The five crown-rated fund has 59.75 per cent of its portfolio in AIM-listed stocks, while 37.94 per cent is in unquoted stocks.

Co-managed by David Horner and David Taylor, the £7.2m is 0 per cent geared and is currently trading at a 79.5 per cent premium to net asset value. 

Editor's Picks

Loading...

Videos from BNY Mellon Investment Management

Loading...

Data provided by FE fundinfo. Care has been taken to ensure that the information is correct, but FE fundinfo neither warrants, represents nor guarantees the contents of information, nor does it accept any responsibility for errors, inaccuracies, omissions or any inconsistencies herein. Past performance does not predict future performance, it should not be the main or sole reason for making an investment decision. The value of investments and any income from them can fall as well as rise.