The investment trust winners and losers in 2024

The best-performing investment trusts year-to-date (data to 12 December) all fall into the adventurous category.

We’ve focused on the top performers in terms of share price total returns, as after all, this is the return that investors pocket rather than the net asset value (NAV), which reflects the performance of the underlying investments.

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When crunching the numbers, using FE Analytics, trusts in the unclassified sector or those with a small amount of assets have been stripped out, as well as those not widely available to retail investors.

Seraphim Space (LSE:SSIT) tops the leaderboard with a share price total return of 69.8%. At the start of the year, it was trading on a discount of over -60%, but is now on a discount of around -40%.

As investment trusts have two parts – a share price and the NAV – changes to discounts can either boost the share price total returns or prove to be a hindrance.

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To give an example of how this works in practice, JP Morgan Asset Management says that if an investment trust sees its NAV increase by 15% at the same time as its discount narrows from -15% to -5%, it will generate a share price return of 29%.

Investor sentiment towards Seraphim Space’s portfolio of early stage space technology businesses has improved on the back of interest rates starting to decline in 2024. Lower interest rates benefit investment areas and types that are “long duration”, meaning that profits are expected to arrive a long way into the future.

Petershill Partners (LSE:PHLL), which like Seraphim Space sits in the Growth Capital sector, is the second-best performer, up 69.1%. Another trust in the sector, Schiehallion Fund Ord (LSE:MNTN), is in 10th place and up 43.9%. 

Growth Capital trusts back early stage private companies. When interest rates started rising at the end of 2021, higher-risk investments became less appealing as yields on lower-risk bonds rose and interest rates increased on cash accounts. 

Towards the end of last year, market expectations on the future direction of interest rates changed. This was several months ahead of the Bank of England making a move to start cutting rates. Since the narrative changed on interest rates, high-growth stocks have been staging a recovery.

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More mainstream investment trusts with a strong retail following, such as Baillie Gifford US Growth (LSE:USA) and 3i Group (LSE:III), both feature in the top 10.

Baillie Gifford US Growth Trust has more than 30% of its assets in the technology sector. This has been a key performance driver this year, with top 10 holdings including Shopify (NYSE:SHOP), Amazon (NASDAQ:AMZN), Nvidia (NASDAQ:NVDA), Netflix (NASDAQ:NFLX), and Facebook-owner Meta Platforms (NASDAQ:META).

3i Group has been the standout performer in the private equity sector over one, three and five years, with its successful stake in Dutch discount retailer Action a key performance driver. However, it is trading on a huge premium of 64.9%. Over the long term, such large premiums tend not to be sustainable.

The rest of the top 10 are more niche in terms their approach, and they are unlikely to be on the radar of most retail investors.

Top 10 investment trusts in 2024 

Source: FE Analytics, total return 1 January 2024 to 12 December 2024. Past performance is not a guide to future performance.

Worst performers in 2024   

Two trends emerge among the worst-performing investment trusts year-to-date.

The first is that a number of adventurous approaches have posted big losses, including HydrogenOne Capital Growth (LSE:HGEN), Macau Property Opportunities (LSE:MPO), Schroders Capital Global Innovation Trust (LSE:INOV) and BlackRock Latin American (LSE:BRLA), with respective losses of -51%, -33.5%, -31.7% and -30.5%.  

The second trend is that investment trusts offering high yields and investing in alternative assets have had another tough year. Gresham House Energy Storage (LSE:GRID), VPC Specialty Lending Investments (LSE:VSL), Regional REIT (LSE:RGL), Gore Street Energy Storage Fund (LSE:GSF) and Digital 9 Infrastructure (LSE:DGI9) are all deep in the red, down -60.3%, -51.7%, -43.9%, -41.6% and -39.1%.

While it’s been a mixed bag of performance for adventurous growth-focused trusts – some bounced back in 2024 and others struggled – there has yet to be a pick-up in performance for high-yielding trusts that focus on niche areas, particularly those in the renewable energy sector.

Such investment trusts offer eye-catching yields of around 7% to 9%, but it appears investors are still shying away due to yields of 4% to 5% being available on low-risk bonds or cash.

Source: FE Analytics, total return 1 January 2024 to 12 December 2024. Past performance is not a guide to future performance.