With the Stocks and Shares ISA deadline (5 April) fast approaching, I have been looking for investment trusts to buy for my account.
I believe these companies are one of the best ways to invest in the stock market. They give me the option to invest and a diverse portfolio of stocks managed by experienced investment professionals at the click of a button.
Unique qualities
What’s more, investment trusts can also hold back 25% of the revenue every year. This revenue cushion can then be used to make up for revenue shortfalls in periods of economic and stock market volatility.
By using this reserve, these corporations can maintain their dividends to investors, whereas many other companies and investment vehicles may have to reduce their payouts if profits fall.
Unfortunately, there is a drawback to owning investment trusts in my Stocks and Shares ISA. These companies usually charge a management fee. This fee can eat into investor returns. Some even charge a performance fee on top of the regular management fee. This can have an even more significant impact on shareholder returns in multi-year periods.
Despite this drawback, I believe the benefits of investment trusts outweigh the negatives. And I would buy both of the trusts below for my Stocks and Shares ISA, considering their attractive qualities.
Stocks and Shares ISA investment trust buys
The first on my list is the Polar Capital Technology Trust. This company specialises in finding technology investments around the world. I think it is a great way to build exposure to this fast-growing industry, although the single sector exposure could be a risk. If technology stocks suffer a significant sell-off, this trust may underperform the market.
Still, it looks as if the world is only becoming more reliant on technology, and I want some exposure to this trend. I believe Polar Capital’s offer provides an excellent opportunity to build exposure to this fast-growing sector. The trust is also managed by an experienced team of professionals who have a deep understanding of the technology sector.
HarbourVest Global Private Equity allows individual investors to build exposure to private equity investments. This industry is usually off-limits to anyone but high net worth individuals.
HarbourVest strategy is designed to give investors “part-ownership of a diversified portfolio of underlying private companies, spanning investment stages from early venture to large-cap buyouts“.
This is a unique strategy, but it comes with a cost. The company charges an annual management fee of more than 2%. This could really eat into returns, especially if the trust’s choices turn sour.
Despite this fee, the trust has been a winner. It has added 120% over the past five years. While past performance should never be used as a guide to future potential, I reckon this track record shows the team at HarbourVest is earning its fee. As such, I think it deserves a place in my Stocks and Shares ISA.
