For many millennials investing for the first time can be a daunting task, particularly for those considering an investment trust, with more than 400 to choose from. Yet, there are a number of interesting options for millennial investors to choose from. 
Below, a group of financial advisers highlight five trusts they believe investors just starting out on their investment journey should consider.
Hipgnosis Songs Limited
First up is ‘alternative’ investment strategy Hipgnosis Songs Limited, chosen by Jim Harrison, director of advisory firm Master Adviser.
The £600.6m trust was founded by Merck Mercuriadis who in his previous career as a music executive managed Nile Rodgers, Beyoncé, Elton John, Mary J. Blige, Guns N' Roses amongst other global names – and some millennials might not know but their parents definitely will.
“An investment trust which feels zeitgeisty and might appeal to younger investors with a long investment horizon and a taste for something other than vanilla is Hipgnosis,” said Harrison.
The trust acquires songs and the associated intellectual property rights, thus receiving three streams of royalties, said the adviser.
These include a ‘mechanical’ royalty when a copy of the song is made via download or on CD, a ‘performance’ royalty, when it is performed live, broadcast or streamed; and, a ‘synchronisation’ fee when it is used on TV or in a video game.
As such it has a high yield of 5 per cent.
“Like an infrastructure fund, it is mainly a capitalisation of cash flows, although the catalogues and individual songs can be sold on,” Harrison explained.
Nevertheless, he warned that is not without its risks.
“The music industry has always been vulnerable to having their product distributed for free, and today’s chart topper can quickly fade,” he said, “Once the income stream from a song dries up, it’s hard to see it holding its capital value.”
Yet it could be an interesting diversifier for a fledgling portfolio and has made a total return of 5.26 per cent since launch in 2018.
Performance of fund since launch
Source: FE Analytics
The trust has significant institutional ownership and is currently trading at a premium of 5.6 per cent to net asset value (NAV). It is not geared and has ongoing charges of 2.63 per cent.
Scottish Mortgage Investment Trust
Next up is the well-known Scottish Mortgage Investment Trust, one of two picked by Philippa Maffioli, senior adviser at Blyth-Richmond Investment Managers.
The £9bn large cap-focused trust is managed by James Anderson and Tom Slater, who look for strong, well-run businesses which offer the best potential and durable growth opportunities for the future.
Scottish Mortgage has made a total return of 120.80 per cent over the past five years, outperforming both the IT Global sector average (53.07 per cent) and the FTSE All World benchmark (43.54 per cent).
The five FE fundinfo Crown rated trust is currently trading at a discount to NAV of 1.2 per cent and is 11 per cent geared. It has ongoing charges of 0.37 per cent.
Blackrock Throgmorton Trust
Maffioli’s second trust is one which will sit alongside her previous pick, the small- and mid-cap focused BlackRock Throgmorton Trust run by Dan Whitestone.
The £581m trust is also able to invest up to 15 per cent in international companies and can take short positions in companies through CFDs (contracts for difference).
Maffioli said Whitestone’s “speciality is constructing a well-diversified portfolio” and should therefore be “the bedrock of a young person’s portfolio”.
Throgmorton was previously run as two portfolios: one long book of UK small and mid-caps overseen by Mike Prentis who retired in 2018, and a CFD portfolio run by Whitestone, who later became sole manager.
The current strategy was only adopted in 2018 when a cap of 35 per cent on AIM stock exposure was removed.
Since 31 March 2018, the trust has made a total return of 18.86 per cent compared with a loss of 6.54 per cent for the average IT UK Smaller Companies peer and a 11.79 per cent fall for the Numis Smaller Companies plus AIM (excluding investment companies) benchmark.
Over five years, the trust has made returns of 105.74 per cent over the past five years, outperforming its IT UK Smaller Companies peer group (44.03 per cent).
It is currently trading at a 2.7 per cent discount, is 29 per cent geared and has ongoing charges of 0.59 per cent.
Pacific Horizon Investment Trust
The fourth trust is Pacific Horizon Investment Trust chosen by Paul Chilver, associate and financial planning manager at Birkett Long.
The £216.9m trust is managed by Baillie Gifford’s Ewan Markson-Brown and Roderick Snell and invests in the Asia-Pacific stocks.
What makes it suitable for millennials, said Chilver, is that being at the start of their investment journey they can endure more volatile strategies such as this.
While it is volatile, the trust has managed to produce top-quartile returns over three, five and 10 years.
Over the past five years, Pacific Horizon has made a total return of 59.27 per cent outperforming the MSCI AC Asia ex Japan benchmark (37.86 per cent) and the average IT Asia Pacific peer (34.25 per cent).
Performance of fund vs sector over the past 5yrs
Source: FE Analytics
The five FE fundinfo Crown rated trust is trading at an 8.4 per cent discount, is 8 per cent geared and has ongoing charges of 0.99 per cent.
Edinburgh Worldwide
Chilver’s second pick is another Baillie Gifford trust, Edinburgh Worldwide managed by FE fundinfo Alpha Manager Douglas Brodie, Luke Ward and Svetlana Viteva.
The £589.3m trust, said the adviser, is another volatile strategy but one that is a good option for long-term investors, particularly given its global small-cap focus.
Edinburgh Worldwide invests in “initially immature entrepreneurial companies” believed to offer long-term growth potential. It can also hold up to 15 per cent of total assets in unlisted investments.
Baillie Gifford claim that it does not seek to track its reference index – the S&P Global Small Cap index – and therefore “a degree of volatility… is inevitable”.
The managers aim to spread risk by holding between 75-125 holdings with exposure to a minimum of six countries and 15 industries.
Edinburgh Worldwide has made a total return of 106.80 per cent over the past five years. The trust is trading at a discount of 4 per cent, is 4 per cent geared and has ongoing charges of 0.75 per cent.