Ian Cowie: how the 35 longest running trusts have fared over 30 years

Of the great investment trusts trading continuously on the London Stock Exchange for decades, our columnist names the five best performers.  

News events may prompt many investors’ minds to turn to matters of longevity, seeking shares with a tried-and-tested ability to survive adversity and deliver real returns over the decades.

No fewer than 35 investment trusts have traded continuously on the London Stock Exchange for 70 years or more, generating growth and income despite stock market shocks that included the Suez Canal fiasco, two oil crises, the three-day week and, most recently, the coronavirus pandemic.

The Bank of England reckons you would need more than £20 today to match the purchasing power of £1 in 1952. For technical reasons, I have been unable to track individual shares over that entire 70-year period but independent statisticians at Morningstar have done so over the last 30 years, when the top-performer among investment trusts that traded throughout this period delivered remarkable returns by turning £1 into more than £61.

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Step forward TR Property, founded in 1905, which has total assets over £1.4 billion today. This star long-term performer still trades 4.7% below its net asset value (NAV) while yielding dividend income above 4%. It is the sole surviving member of the Association of Investment Companies (AIC) ‘Property Securities’ sector, TRY turned £1,000 invested in 1992 into an eye-stretching total of £61,783 by the end of last month.

Its fund managers, including Marcus Phayre-Mudge and Alban Lhonneur, generate growth and income from a portfolio that includes shares in the German real estate companies, Vonovia and Phoenix Spree Deutschland, as well as the British warehouse group, Segro, and the more diversified property developer, Land Securities.

The second-best performer during these 30 years was Scottish Mortgage, founded in 1909, an even bigger investment trust with total assets of £12 billion. Despite recent setbacks, which have seen SMT shrink by 39% to rank third-from-bottom over the last year in the AIC ‘Global’ sector, SMT turned £1,000 in 1992 into £46,819 by the end of last month. Top holdings include the vaccine group, Moderna (MRNA), the electric car-maker Tesla (TSLA) and the Dutch semi-conductor manufacturer, ASML (ASML).

Third-ranked is Canadian General Investments (CGI), founded in 1930, another heavyweight with total assets of £780 million, that turned £1,000 into £43,904 over the last three decades. Shrinkage of nearly 17% during the last year has depressed CGI’s shares to trade 34% below their NAV, despite a 2.8% dividend yield. Its diverse portfolio includes the self-descriptive West Fraser Timber and Canadian Pacific Railways, as well as the gold royalties group, Franco Nevada.

Fourth is Henderson European Focus, founded in 1947, with total assets of £376 million, which turned £1,000 into £33,347 during the last three decades. HEFT’s top 10 holdings include the oil giant Shell, the insulin-maker, Novo Nordisk, and the world’s biggest food company, Nestlé. HEFT yields 2.3% income and trades at a 13% discount to NAV.

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Fifth is JPMorgan American, the oldest of our long-term star performers, having been founded in 1881. Over the 30-year period it turned £1,000 into £31,502. It currently has total assets of more than £1.6 billion. JAM’s top three holdings are the technology giant Apple, the software group Microsoft and the online retailer, Amazon.

Annabel Brodie-Smith, communications director of the AIC, told me: “It’s comforting for investors facing today’s challenging markets to see that over the decades investment companies have survived many spells of market volatility including the 1973 to 1974 crash, Black Monday in 1987, the dot-com boom and bust, the financial crisis and the pandemic.

“The first investment company was launched in 1868 and the industry has withstood two World Wars and the Great Depression. Investors looking for investment companies which have stood the test of time have plenty of choice.

“Investment companies have unique income benefits which have helped 17 investment companies raise their dividends for more than 20 consecutive years and they are listed companies where shareholders can have their say on how their company is run, both important features for the future.”

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Nobody knows what will happen during the reign of King Charles III. But the history of investment trusts strongly suggests that some should be able to cope with whatever comes along, while generating real growth and income for shareholders.

Ian Cowie is a shareholder in Apple Inc (NASDAQ:AAPL), Canadian General Investments Ord GBP (LSE:CGI), Nestle SA (SIX:NESN) and Novo Nordisk A/S ADR (NYSE:NVO) as part of a globally-diversified portfolio of investment trusts and other shares.

Sources: Association of Investment Companies and Morningstar. *30-year data is from 1 September 1992 to 31 August 2022.