The Motley Fool

2 high-growth investment trusts that could supercharge your pension

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Investment trust sales have hit a record high, attracting more than £500m in the first half of this year, up 75% in just 12 months, according to the Association of Investment Companies. Those figures only apply to financial adviser purchases, private investors are also pouring in, and with good reason, because there is a wealth of high-performing, low-charging investment trusts to choose from. Here are two of my favourites.

Trust this

The Mercantile Investment Trust (LSE: MRC) reported its results for the six months to 31 July today and gladdened loyal investors with a 16.2% return on net assets, beating 10.7% on the company’s benchmark index. The return to shareholders was 14.5%, as the discount at which the shares trade widened slightly over the half year. It also paid a total dividend of 21p, up from 20.5p in 2016.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Mercantile is managed by JP Morgan and aims to achieve capital growth through a portfolio of UK medium and small company stocks. Long-term performance has been solid, it has returned 120% over the past five years, according to figures from Trustnet.com, and 23% over 12 months. Gearing is relatively modest at 3%.

Cheap and cheerful

Management invests across a spread of sectors but with a tilt towards financial services, where its position in private equity investor 3i performed notably well. It wisely minimised its exposure to the troubled oil services sector. There is plenty of concern about the state of the UK economy but the trust’s joint managers remain relatively positive. “The economy is proving to be more resilient than had been expected and monetary policy has been accommodating. These factors combined should provide a positive backdrop for equities.”

Mercantile, which now manages a hefty £1.66bn, currently trades at a discount of 9.86%, which I find reassuring as I dislike buying trusts at a premium to net asset value. Ongoing fund charges total just 0.5% a year, and the current yield is 2.32%. Investing in this trust could prove good business.

Go Nimmo

Standard Life UK Smaller Companies Trust (LSE: SLS) is another long-standing investor favourite, and this £310m investment trust has also performed smartly, returning 29% over 12 months, and 115% over five years. That comes as no surprise when you discover it is run by smaller companies whizz Harry Nimmo, who was renowned when I first started writing about investment trusts 15 years ago, and has been running this one since 2003.

Nimmo’s biggest holding right now is Foolish favourite Fevertree Drinks, which makes up 5% of his portfolio, and has more than justified its place with its fizzy recent performance. Some 10% of the portfolio is invested in the FTSE 250, with the remainder split between the Numis Smaller Companies index and AIM. The yield is just 1.48%, more than you might expect on a smaller companies fund, but charges are higher than on Mercantile, with a total expense ratio of 1.17% a year. So far, Nimmo has been worth the money.

Think small

The trust trades at a discount of -5.43% to net asset value. Personally, I wouldn’t have been surprised if it traded at a premium, given Nimmo’s reputation. If buying individual smaller companies stocks is too risky for you, either of these trusts could do the job very nicely on your behalf. Small is beautiful

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

Harvey Jones no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.