Only 15 trusts that have made top-quartile returns over the long run have managed to stay at the top of their sectors in 2022 so far, Trustnet research shows.
The big market shift of 2022 has seen the performance rankings up-ended as the growth style lost market leadership and investors rushed to adapt to a rising interest rate environment. Against this backdrop, many long-term winners have become losers, and vice versa.
But which of the long-term winners have been resilient enough to remain undisturbed at the top of their sectors, despite this reversal of fortunes?
Of the trusts that are in the Association of Investment Companies (AIC) universe, 67 were ranked in the top-quartile of their peers over the 10-year period. Of these, only 15 – or 22% – are first quartile year to date, gaining a place in the table below.
Source: FE Analytics
Based on year-to-date performance, the highest-flier was the £114.4m Doric Nimrod Air Two, a Guernsey company focused on generating income and capital returns through the acquisition, leasing and selling of aircraft. It has returned 54% since year-start.
The silver and bronze medals go to the only two more trusts that scored double-digit returns: Epicure Managers Qatar Gulf Investment Fund and BlackRock Energy and Resources Income.
The former seeks exposure to emerging investment opportunities in the Gulf Cooperation Council region that have not yet been priced in by the market, predominantly investing in the financials and industrials sectors; the latter focuses on international mining and energy equities, co-managed by Mark Hume and FE fundinfo Alpha Manager Tom Holl, who has stood out for having maintained a consistently high alpha score over a proven track record in rising and falling markets.
The performance of both these trusts is evidence of the increased market interest in commodities and energy, while the more traditional sectors have capitulated, as illustrated in the chart below. As Trustnet recently reported, energy prices have gone up so steeply that some worry about an upcoming decline.
Performance of sectors over 2022
Source: FE Analytics
Registering a 4% growth since the beginning of 2022, the only other companies achieving positive returns were Merchants Trust and BBGI Global Infrastructure.
The £763m Merchants Trust invests in higher-yielding large UK companies and has exposure to some of the best-performing sectors of the year, which drove its performance.
Among its top-10 holdings are British American Tobacco and Imperial Brands (tobacco stocks have significantly outperformed the wider market this year) as well as energy and mining companies such as Shell, BP and Rio Tinto, which have benefitted from surging commodity prices.
BBGI Global Infrastructure is bigger in size (£1.1bn) and also profited from positive conjunctural factors, as investors have been hedging their portfolios from inflation by gaining exposure to the inflation-proof infrastructure sector.
Further down the list, the only IT Global trust in the ranking is the £4.5bn F&C Investment Trust, with a 4% loss return determined by its significant exposure to US tech companies.
Finally, with exposure to consumer products and financials that couldn’t save it from its fall, Fidelity Special Values has lost 7.6% since the turn of the year. However, it has held up better than most of its peers as the value style came back into favour.