Last week’s inflation-related market wobble has provided yet another opportunity for me to snap up shares to hold for the long term. Among these has been an investment trust that’s been on my shopping list for some time.
Diversified investment trust
As it sounds, the Pacific Horizon Investment Trust (LSE:PHI) is focused on increasing investors’ wealth through buying what its managers consider to be the best growth shares in the Asia-Pacific region and Indian Sub-continent.
Understandably, stocks from big markets such as Hong Kong and China take up roughly a third of the trust’s assets. Another 20% is invested in India. Further down, holders get to own shares from economies such as Vietnam and Indonesia.
This suits my own investing objectives. While most of my cash remains invested in developed nations, I do want some exposure to those that have very attractive prospects going forward thanks to the rising affluence of their populations.
With between 40 and 120 holdings at any one time, the trust isn’t overly dependent on a few companies succeeding either. Based on its most recent factsheet, its biggest position is in Singaporean internet giant SEA Limited. Indian carmaker Tata Motors and base metals miner MMG Limited take second and third spots respectively.
Opportunity?
Up until very recently, PHI has been knocking the ball out of the park. From the March 2020 market crash to mid-February 2021, the share price rocketed roughly 250%. That’s the sort of performance I might get from small-cap companies! Since then, however, it’s lost momentum.
As much as I see this as an opportunity, buying now is not devoid of risk. Past performance is, after all, no guide to the future. It’s quite possible that the recent weakness seen in the share price will continue for a while if, for example, the pandemic continues to ravage India.
There’s also the 0.92% management fee to consider. Pacific Horizon Investment Trust’s recent returns might dwarf those of an emerging markets index fund but the latter is a far cheaper alternative.
Worth the risk
I think these risks are worth the potential rewards. Timing the market sounds great in theory. However, it’s difficult to do consistently in practice. So, I’ll drip-feeding money into PHI. That may not be the optimum strategy if its share price rises from here. However, it makes the buying process less challenging psychologically.
With regard to the fees, I’m content to assume that the investment trust’s managers know this part of the global market better than I do. Backing this up, PHI has an active share of 91%. This means its managers are actively picking stocks rather than just tracking one or more indexes. The higher this active share percentage, the more confident I can be that the managers are at least attempting to generate better returns.
As well as offering geographical and sector diversification, PHI can also buy in to private companies like its hugely popular Baillie Gifford peer Scottish Mortgage Investment Trust. This is something passive funds won’t be able to replicate and could make a big difference to performance.
Long-term hold
The Pacific Horizon Investment Trust is unlikely to generate the same performance in 2021 as it did last year. Even so, I see this as another solid ‘buy-and-forget’ addition to my portfolio. I hope buying now could still lead to great returns over the next 10 years.
