Investing Stocks and Shares ISA savings in investment trusts can be a smart move. These products tend to offer diversified exposure to the stock market at a relatively low cost.
Here, I’m going to highlight three investment trusts that have delivered great returns in recent years. I think they could be worth considering as part of a diversified ISA portfolio.
Easy access to tech stocks
First up is the Allianz Technology Trust (LSE: ATT), a niche trust that’s focused on technology stocks.
It’s managed by the highly experienced AllianzGI Global Technology team, which is based near Silicon Valley (where many of the world’s top tech companies are located).
One reason I like this trust is that it provides exposure to a broad mix of tech businesses. Not only does it hold mega-cap tech giants such as Microsoft and Nvidia but it also holds less well known companies such as cybersecurity specialist CrowdStrike and chip manufacturing equipment maker Lam Research.
While this trust has delivered outstanding long-term returns (for the five-year period to the end of January its share price rose 135%), it does carry a higher level of risk than a broad global equity trust. If tech stocks experience a short-term pullback (and they often do), it’s likely to underperform.
Taking a long-term view however, I think it’s likely to do well. Looking ahead, the world is only going to become more digital.
Beating the S&P 500
Next, we have JPMorgan American (LSE: JAM). This is a US equity-focused trust managed by experts at financial services powerhouse JPMorgan.
It aims to generate capital growth by investing in high-quality businesses with good management and strong balance sheets.
What I like about this trust is that it has exposure to both growth and value stocks. This means it has the potential to outperform in different market conditions.
Performance has certainly been strong lately. For the five-year period to the end of January, the trust’s share price rose 128% – miles ahead of the S&P 500 index’s return of 99%.
Of course, the risk here is that the US market – which has been strong in recent years – could experience a period of underperformance. This is something to consider.
In the long run however, I think the US market is likely to keep delivering strong returns. After all, it’s currently home to many of the world’s most dominant companies.
Europe’s best companies
Finally, we have the BlackRock Greater Europe Investment Trust (LSE: BRGE). This is another growth focused product.
However, its focus is on Europe (including the UK). European equities are often ignored by UK investors. And I think that’s a shame. While the region may not have the same track record as the US, it is home to some fantastic companies including the likes of diabetes drug specialist Novo Nordisk, semiconductor manufacturing equipment maker ASML, and luxury goods giant LVMH (all of which are in this trust).
One downside to this product is that its ongoing charges are 0.98% a year. That’s quite a high fee for an investment trust.
However, given that the trust has returned about 100% over the last five years (to 28 February), versus around 62% for its benchmark (the FTSE World Europe ex UK Index), I can justify the charges here.
