Are you looking for an investment fund that gives you exposure to some of the world’s fastest-growing regions and with a proven record of success? I have two for you right here.
Matter of trust
Both reside in the investment trust sector, which is the unsung hero of the investment world. It isn’t heavily marketed, unlike unit trusts, but its best funds just get on with the job of making people richer. There are hundreds to choose from but these are in the top five performers of the last 20 years.
If you had invested each year’s maximum ISA limit in Aberdeen Asia Focus Investment Trust (LSE: AAS) from 1999 to 2018, you would have almost £1m at your disposal today. You would have pumped in £206,560 in total, and the trust would have turned that into a staggering £966,042.
That makes it the second best performing investment trust of all. You can find the very best one here. The region it targets may surprise you.
The other fund I’m looking at is the fifth best performer over the same period. If you had maxed out your annual stocks and shares ISA allowance with renowned global investment trust Scottish Mortgage Investment Trust (LSE: SMT) you would now have £932,615.
Glory days over?
Aberdeen Asia Focus is a £396m specialist fund that invests in Asia Pacific, excluding Japan. It is 15% invested in Thailand, with sizeable exposure to equities in India, Malaysia, Hong Kong, Singapore and Indonesia, as well as the Philippines and New Zealand. Top 10 holdings include stocks such as Bank OCBC Nisk, Hana Microelectronics, Oriental Holdings and Asian Terminals, which you are unlikely to track down on your own.
This fund is primarily for those wanting growth as it offers a low yield of just 1.24%. It trades at a discount of 10.2% to underlying net asset value, which is generally a good thing in an investment trust as it gives you a cushion against market falls or shifting investor sentiment.
However, I’m a little worried that its glory days may be over. It is up 39.9% measured over five years, but the benchmark Asia-Pacific index grew 77.2% over the same period, according to Trustnet.com. Rupert Hargreaves recently highlighted another investment trust in the same sector, Schroder Oriental Income Trust, and this grew 82.7% over five years. Past performance is no guide to the future, but it’s always worth taking into account.
Global play
Scottish Mortgage is a long-standing favourite of mine. There are no worries about its comparative performance, it is up 135% over five years, against 75% on its benchmark global investment trust index. It’s a growth fund, the yield is just 0.63%.
It gives you a genuine global spread of equities, although I should include a note of caution here: roughly half the fund is invested in the US and a quarter in China, with outsize exposure to tech giants Amazon and Netflix, and Tencent and Alibaba. This is a call that could start to unravel, and in fact the fund is down 11.8% in the last six months, double the 5.2% drop across its sector. Yet it remains expensive trading at a 3.2% premium to net asset value, above its long-term average of 1.6.
This underlines the importance of always looking under the lid although I wouldn’t write off Scottish Mortgage as management has repeatedly proved its skills over the long term.
