The average investment trust has struggled to beat the market on a 10-year view after the global financial crisis, lower for longer interest rates and low inflation meaning we have lived in a slow growth world since 2008. 
As a result, only four investment trusts from the IT UK All Companies and IT UK Equity Income sectors have outperformed the FTSE All Share over the last decade, according to data from FE Analytics.
In fact, FE data shows that the average trust in both UK sectors has underperformed the market over the last decade, as the below graph shows.
Performance of sectors vs FTSE All Share
Source: FE Analytics
The FTSE All Share’s 69.09 per cent return over 10 years has beaten the UK All Companies and Equity Income sectors by 14.33 and 16.18 percentage points respectively over the period.
This has been largely due to the rise of the ‘expensive defensives’ including tobacco stocks and utilities which dominate the FTSE 100 – which in turn makes up around 80 per cent of the All Share.
Having previously looked at the performance of active open-ended funds over one year and 10 years, in this article FE Trustnet examines the performance of UK investment trusts over the last decade as well their volatility.
IT UK All Companies
Of the 14 qualifying trusts in IT UK All Companies sector, only one has outperformed the FTSE All Share’s 69.09 per cent while exhibiting lower volatility (14.07 per cent).
Risk/return over 10yrs
Source: FE Analytics data as at 30/11/16
Invesco Asset Management’s Keystone IT, run by FE Alpha Manager Mark Barnett, is the only fund to outperform (112.81 per cent returned over the last 10 years) with lower volatility (12.56 per cent).
The £218.5m trust, which has an ongoing charges figure of 0.71 according to the AIC (though performance fees may also be added), has been the fourth best performer in the sector over the period and has the lowest volatility.
It currently holds a number of the bond proxy-type stocks, including British American Tobacco, Imperial Brands and AstraZeneca, which have performed particularly well over the last decade.
At the other end of the spectrum is the Aurora Investment Trust, now run by Gary Channon, which has lost 5.95 per cent over the last decade while experiencing 23.11 per cent volatility.
The £43.7m trust, which was managed for the majority of the period by James Barstow, with Channon taking over in January this year, has performed much better under the current manager’s tenure, sitting in the top quartile since he took over.
The trust uses a value-based approach, an investment strategy that has struggled over the past decade, but has come back into favour in 2016.
The other outlier is the Henderson Opportunities Trust run by FE Alpha Manager James Henderson, who took over from Colin Hughes in 2007.
The £31.7m fund, which has an ongoing charges fee of 1.02 per cent (plus performance fees) is in the bottom quartile over 10 years, returning 47.80 per cent, while being the most volatile (26.36 per cent).
IT UK Equity Income
Three funds in the IT UK Equity Income sector have outperformed the FTSE All Share with lower volatility over the last decade, according to FE Analytics.
Risk/return over 10yrs
Source: FE Analytics data as at 30/11/16
Of the three, two are run by FE Alpha Manager Mark Barnett, with the Perpetual Income and Growth Investment Trust returning 114.36 per cent compared to the FTSE All Shares’ 69.09 while also experiencing the lowest volatility in the sector (12.06 per cent).
The other is the £1.3bn Edinburgh Investment Trust, which he took over from Neil Woodford following the latter’s departure from Invesco Perpetual in 2014, which has returned 135.35 per cent with 13.14 per cent volatility.
Rounding out the trio is the £1.3bn City of London Investment Trust run by Job Curtis, which has returned 102.33 per cent with 13.23 per cent volatility.
The best performer over the last 10 years has been the five crown-rated Finsbury Growth & Income Trust run by FE Alpha Manager Nick Train, which has shot the lights out - returning 165.36 per cent - thanks to his buy-and-hold quality growth investment strategy, though it has been more volatile (16.02 per cent).
Another outlier is the £15.9m Miton The Investment Company run by Gervais Williams and FE Alpha Manager Martin Turner since 2013 having previously been run by Maxwell Ward. The fund has been a top quartile performer over 10 years, returning 116.98 per cent, but has been the most volatile in the sector (25.93 per cent).
This is part due to the management’s preference for smaller companies, with the likes of Charles Taylor, Anglo Pacific and Aggregated Micro Power among its top 10 holdings.
The worst performer in the sector has been the Troy Income & Growth trust, which has returned 15.89 per cent over the last decade, though this was largely due to a disastrous run in 2008 which saw the trust - then run by Susan Anderson and David Boyle – lose more than half its value.
Over three years £211m five crown-rated fund run by Hugo Ure and FE Alpha Manager Francis Brooke has been a top quartile performer.
IT UK Smaller Companies
No trust in the IT Smaller Companies sector has managed to outperform the Numis Smaller Companies ex IT index, which has returned 119.09 per cent over the last decade with volatility of 17.41 per cent.
Risk/return over 10yrs
Source: FE Analytics data as at 30/11/16
The closest has been the £146m Montanaro UK Smaller Companies trust, which has returned 84.47 per cent over the last decade while experiencing volatility of 18.73 per cent, the best in the sector.
The best performer in the sector, however, has been the £235m Standard Life UK Smaller Companies trust, run by FE Alpha Manager Harry Nimmo, which has returned 264.91 per cent with the second lowest volatility (19.17 per cent).
The trust has a clean ongoing charges figure of 1.13 per cent, according to the AIC, and currently yields 1.9 per cent.
The worst performer has been the £3.3bn Gresham House Strategic trust, which has returned 18.54 per cent while also proving the most volatile (34.36 per cent).
Another underperformer in the sector has been the £3.6m SVM UK Emerging trust, run by Colin McLean and deputy manager (FE Alpha Manager) Margaret Lawson.
The trust, which is predominantly invested in the services sector, has returned 18.63 per cent over the last decade with volatility of 25.47 per cent.