Nick Train’s Finsbury Growth & Income, Jupiter European Opportunities and BlackRock Smaller Companies are the most consistent outperforming investment trusts of the past decade, according to research by the Association of Investment Companies (AIC).
With consistency a key factor to consider when researching performance, the AIC ranked trusts by discrete annual share price total return (to 31 May) and outperformance against the average investment company to find the top-20 most outperforming trusts. Trusts with the same consistency score were ranked by volatility.
The research found that nine of the top-20 favoured small or unquoted companies – either globally or in specific regions. Six came from small-cap sectors, while three were private equity trusts.
Annabel Brodie-Smith, communications director of the AIC, said: “Following the suspension of Woodford Equity Income, it’s interesting that nearly half of the most consistent performers are investing in smaller companies or unquoted companies.
“The closed-ended investment company structure is particularly well-suited for these hard-to-sell assets, allowing managers to focus on the long-term performance of the portfolio.”
However, the top-20 came from a wide range of 13 sectors, which the AIC said demonstrated that managers have been able to achieve consistent performance investing in different areas and using a range of styles and strategies.
Source: AIC
In the top spot was the £1.8bn, five FE Crown-rated Finsbury Growth & Income overseen by FE Alpha Manager Nick Train.
The trust – like Jupiter European Opportunities and BlackRock Smaller Companies – outperformed in nine years of the previous 10, but did so with the lowest volatility.
The UK equity trust aims to outperform the total return of the FTSE All Share index over the long term.
Train said: “The consistency of our return is a surprise to Lindsell Train and not something we have consciously targeted. It seems safe to assume, therefore, that it must be the result of good fortune.
“The satisfactory outcome to-date is the result of big, long-term investment calls being given time to come off.”
The FE Alpha Manager said that it had been encouraged to stick to its highly strategic approach – and resulting “meaningful portfolio concentration” – by the trust’s board.
Train’s commitment and belief in the success of his trust is proved by his own “sizeable ownership of the trust,” according to Rayner Spencer Mills Research.
According to data from FE Analytics, over 10 years Train – who has managed the trust since January 2000 – has made a total return of 513.86 per cent compared with a gain of 189.57 per cent for the average IT UK Equity Income peer and a 172.34 per cent return for the FTSE All Share index.
Performance of trust vs sector & benchmark over 10yrs 
Source: FE Analytics
The second-best performer is managed by another FE Alpha Manager and comes from the IT Europe sector: Jupiter European Opportunities.
The £986.5m trust is managed by FE Alpha Manager Alexander Darwall who invests in European companies he considers as good growth prospects, taking into account economic trends and business development.
the company as produced returns of 549.04 per cent, one of the top three results out of all twenty investment companies.
Darwall said: “We seek to identify companies which others may overlook and which the market underappreciates in terms of earning power over the longer term.
“We believe that this approach is sustainable because the inputs have not changed: we continue to meet company management, we are investors rather than speculators and we have a consistent style applied through different market cycles and irrespective of market sentiment.”
He added: “We typically avoid investing in politically sensitive companies and companies which have a lot of fixed assets and high levels of debt, preferring to focus on businesses with flexible assets and flexible supply chains.
“Such businesses, particularly those predicated on the specialised use of technology, often have the ability to sidestep crude protectionist barriers.”
Performance of trust vs sector & benchmark over 10yrs 
Source: FE Analytics
Over the past 10 years, Darwall – who took charge of the trust in January 2000 – has made a total return of 616.91 per cent compared with a 257.95 per cent gain for the average peer and a 177.47 per cent rise in the FTSE World Europe ex UK benchmark.
The trust is 5 per cent geared, is currently trading at a 0.6 per cent discount to NAV and has ongoing charges of 0.90 per cent.
The third investment company is BlackRock Smaller Companies, which made the highest total returns over the past decade, according to the AIC’s data, of 632.66 per cent.
The UK small-cap trust invests in companies that are comparatively undervalued but also have a long-term investment opportunity.
It is co-managed by Mike Prentis – who joined the trust in 2002 – and Roland Arnold, who joined mid-way through last year.
Over the past 10 years, the trust has made a total return of 657.49 per cent compared with a 325.12 per cent gain for the average IT UK Smaller Companies peer and a 203.80 per cent return from the Numis Smaller Companies + AIM (Excluding Investment Companies) index.
It has a yield of 2.2 per cent, is 6 per cent geared, trading at a discount to NAV of 3.1 per cent and has an ongoing charge of 0.73