However, there are a number of trusts which have managed to trump even the top performing funds during the recent market turbulence.
Capital Gearing Trust
The highly-diversified portfolio is a favourite with retail investors, and with good reason. As well as having a stellar long-term track record, Peter Spiller’s trust has weathered the financial storm better than any portfolio across the IMA UK All Companies and AIC UK Growth sectors, with one of the lowest volatility scores.
Performance of trust versus sectors over 5 years
Source: FE Analytics
It’s returned 65.72 per cent over the period, beating its sector average by more than 70 per cent. In 2008, Spiller returned 4.72 per cent, compared to losses of 36.49 per cent from its peer group. He also managed to keep up with the market in 2009 and 2010, and once again protected effectively against the downside in 2011.
The £87m portfolio is a trust of trusts, which means that it invests almost entirely in closed-ended funds. It uses the FTSE Investment Companies index as its benchmark, which it’s beaten over a one, three, five and ten year period.
It is an exceptionally diversified portfolio, with only 9 per cent invested in its top-10 holdings. Only three holdings have an exposure of more than 1 per cent.
Spiller has headed up the trust since 1982. Capital Gearing is the only portfolio in its IT UK Growth sector that is trading on a premium – currently at 8.8 per cent, according to data from the AIC.
Edinburgh Investment Trust
Like Capital Gearing, Neil Woodford’s £1.16bn Edinburgh Investment Trust tops both its IT and IMA equivalent sector over a five year period, this time with returns of 65.72 per cent. It’s also among the top three performers in the group over three years.
Performance of trust versus sectors
| Name | 1yr (%) | 3yrs (%) | 5yrs (%) |
| Edinburgh Investment Trust | 27.35 | 87.28 | 48.31 |
| IMA UK Equity Income | 13.54 | 38.41 | 5.71 |
| IT UK Growth & Income | 13.03 | 45.28 | -4.56 |
Source: FE Analytics
The trust is in the same mould as Woodford’s higher profile Invesco Perpetual Income and High Income funds, in that in has a preference for defensive companies with strong balance sheets. These companies have fared well over the last five years, particularly during market downturns, which goes a long way towards explaining why it has outperformed with below average volatility. The manager lists GlaxoSmithKline, AstraZeneca and British American Tobacco in its top-five holdings.
With a one year historic yield of 4.16 per cent, it’s yielding more than both of these open-ended funds, and also trumps them over three and five years. It’s currently trading on a premium of 7.6 per cent.
Murray International Trust
The top three vehicles across the four IT and IMA global sectors over five years are closed-ended: Ruffer Investment Company, Murray International and Lindsell Train.
The Ruffer portfolio has the best record of the three over five years, but manager Steve Russell has a high proportion of his assets invested in bonds, currencies and gold. In a recent interview with FE Trustnet, Russell explained what he expected from the next phase of the crisis.
Of the remaining two, Bruce Stout’s Murray International Trust comes out on top in the risk-adjusted return standings. According to FE data, it’s returned 93.63 per cent over the period, marginally beating Nick Train’s Lindsell Train IT with less volatility. Train’s portfolio has returned more over three years, but again it’s achieved this with a higher rate of risk.
Performance of trusts versus sector over 5yrs
Source: FE Analytics
Stout’s trust has more of an income focus than Train’s, which tends to hold investments in good stead during times of crisis. However, Train’s more cyclically focused portfolio has done better during market upturns.
Murray International has a TER of 1.1 per cent, and is yielding 3.73 per cent. It’s on a premium of 6 per cent.