How Andy Pitts’ 20 investment trust tips fared over past year

Andrew Pitts’ trust tips (adventurous and conservative portfolios) were first introduced by Money Observer more than 20 years ago. Their performance began to be monitored as portfolios in August 2014. In July 2020, Andrew took over the portfolios. The trust tips are made by Andrew and not interactive investor. This is the last article in the series.

The two hypothetical portfolios of investment trust tips have delivered the goods over the near-decade long track record, with the previous update in April showing outperformance versus the FTSE All-Share index.

The portfolios, which appeared in Money Observer, are now being retired with plans in the pipeline for other forms of investment trust portfolio content at the start of the year rather than mid-year.

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In this final update, I crunched the numbers to assess how the two portfolios fared over the past year, three years and five years .

Each portfolio contains 10 trusts split equally between geographic regions or strategies.

Adventurous portfolio

As you’d expect, constituents in the adventurous portfolio are more prone to blow hot and cold over short periods. The hope is that over periods such as one year, due to the variety of sectors, the best-performing trusts will do the heavy lifting and make up for the worst performers.

Over the past year this has indeed played out, with Allianz Technology (LSE:ATT) and Pershing Square Holdings (LSE:PSH) delivering impressive gains of 51.3% and 48.6% in share price total return terms. At the bottom of the table Baillie Gifford Shin Nippon (LSE:BGS) lost -18%, and its three- and five-year returns are even more bleak, down -49.8% and -36.7%.

Over one year, the adventurous portfolio returned 14.8%. This compares with 13% for the FTSE All-Share, and 19.9% for the FTSE All World.

Over the past year, technology has been the dominant theme driving stock markets, with a narrow cohort of stocks heavily influencing the direction of US and global indices.

Allianz Technology holds six of the so-called Magnificent Seven among its top 10 holdings, with Tesla (NASDAQ:TSLA) the exception. Nvidia (NASDAQ:NVDA) is the biggest weighting, at 11.9%.

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Pershing Square, managed by star investor Bill Ackman, is a highly concentrated portfolio of US-listed stocks. Ackman seeks out companies that are conservatively financed, have predictable recurring cash flows, and high barriers to entry. His stock picking has paid off over the past year, and over longer time periods.

Third in the table is Monks (LSE:MNKS), which invests globally and is regarded as a less aggressive version of Scottish Mortgage. It invests in high-growth shares, but spreads risk by having around 100 holdings. Over the past year, Monks is up 19.7%, which puts it in the second quartile in its sector. Investors will be hoping this is the start of a turnaround in fortunes, with the trust down -13.3% over three years and producing fourth-quartile returns of 30.2% over five years.

Investors who have been following the adventurous portfolio will also be hoping for improved performances from other constituents, particularly BlackRock Throgmorton Trust (LSE:THRG) and Baillie Gifford Shin Nippon.

UK smaller company specialist BlackRock Throgmorton has, in common with peers, had a tough couple of years due to the part of the market it fishes in suffering owing to rising interest rates. Over three years, its share price is down -31.4%. However, over 10 years it has managed to gain an edge more often than not. Its latest annual report (to 30 November 2023) shows that the performance of its underlying investments – the net asset value (NAV) – beat its benchmark, the Numis Smaller Companies plus Aim (ex investment companies) index, in eight of the past 10 years.

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Baillie Gifford Shin Nippon has made big paper losses over one, three and five years. Managed by Praveen Kumar it seeks to grow capital over the long term by investing predominantly in Japanese smaller companies possessing substantial growth potential. As our recent Fund Spotlight feature pointed out over 15 years the trust has delivered outperformance, but returns over other time periods disappoint.

If performance does not improve, investors will be offered an escape route. In its annual results (at the end of March), the board said that it will commit to a one-off tender offer (of 15% of the issued share capital) if the performance of its underlying investments (the NAV) fails to beat the MSCI Japan Small Cap Index over three years to 31 January 2027.

10 members of the adventurous portfolio 

Data to 30 June 2024. Source: FE Analytics . Past performance is not a guide to future performance. 

Conservative portfolio

JPMorgan American (LSE:JAM) is the standout performer among the 10 conservative picks over the past year, up 31.8%. It is also the top performer over three and five years, up 57% and 130%. It combines a growth and value investment approach, with two investment teams aiming to pick shares that represent the best of both worlds.

Jonathan Simon, one of the trust’s managers, will retire in early 2025. In April’s quarterly update for the portfolio, it was noted that the trust has a very well-resourced team that implements a tried-and-tested investment policy

Henderson EuroTrust, which in early July merged with Henderson European Focus Trust to become Henderson European Trust  (LSE:HET), took second place with a one-year return of 20.8%. Henderson European’s mandate is to invest in a focused portfolio of Europe’s “global champions”, essentially large, established businesses that will be selected with no particular style bias. The combined trust is managed by EuroTrust’s former lead manager, Jamie Ross, and Tom O’Hara, who was co-lead of European Focus.

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In third place is Fidelity Special Values (LSE:FSV), managed by Alex Wright, up 20.1% over one year. The contrarian investor recently said the UK’s cheap valuations have “continued to create good opportunities for attractive returns from UK stocks on a three-to-five-year view”.

Four other trusts produced impressive one-year returns. Private equity portfolio Pantheon International (LSE:PIN) was up 20%, followed by gains of 19.3%, 19.2% and 15.9% for Schroder Japan Trust (LSE:SJG),Bankers (LSE:BNKR) and Schroder Asian Total Return (LSE:ATR).

Overall, the strong gains for the top seven trust performers over one year helped deliver a 15.4% return for the conservative portfolio. This was ahead of the adventurous portfolio return of 14.8% and the 13% return for the FTSE All-Share. It did not, however, keep up with the 19.9% gains achieved by the FTSE All World.

Wealth preservation trust Capital Gearing (LSE:CGT) provided defensive ballast, up 5.6% over one year. Investors, however, will be hoping its three-year returns improve, particularly when 5% yields are offered by money market funds, which make a compelling defensive option given the current level of interest rates.

JPMorgan Emerging Markets (LSE:JMG) was second from bottom over one year, up 4.6%. It has been managed by Austin Forey since 1994. Over three years, it is the worst performer of the 10 conservative picks, down -16.3%, while over three years it is second from bottom, up 14.8%.

The biggest laggard over both one and three years is Finsbury Growth & Income (LSE:FGT). The trust is down -2.8% over one year, up 0.8% over three years and up 2.6% over five years. It was announced this week that the trust is seeking shareholder approval to renew its share buyback allowance with a view to narrowing its current -9.5% discount.

Manager Nick Train’s recent track record is underwhelming due to a number of his top stock positions not paying off, which has hurt overall returns because it is a concentrated portfolio of just 21 stocks.  

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Train has been proactive in addressing his underperformance, apologising on numerous occasions.But he is not deviating from his investment style. In a June update to investors, he said: “Our investment approach involves constructing concentrated portfolios built around companies where we have high conviction about the business quality.

“When we do make a mistake, or when areas of the market we are not invested in do well, the concentration of the portfolio can result in disappointing returns. However, concentration does indeed cut both ways and if we are right today about the business prospects for the majority of portfolio holdings and their undervaluation there could be material upside.”

10 members of the conservative portfolio 

Data to 30 June 2024. Source: FE Analytics. Past performance is not a guide to future performance.