The outlook for the global economy is rather uncertain at the present time. In the US, there is political risk as a requirement to increase the debt ceiling expires at the end of the month. In Europe, Brexit is causing considerable uncertainty, while a potential end to QE in the eurozone may cause economic challenges over the medium term. And while China is growing quickly, its transition to a consumer-focused economy is unlikely to be completely frictionless.
Still, a number of similar problems have faced the global economy in recent years. Yet share prices in the UK and across the world have risen significantly. Looking ahead, a continuation of the Bull Run of recent years could be on the cards. As such, buying these two top-performing investment trusts could be a shrewd move.
Investing globally has served the Scottish Mortgage Investment Trust (LSE: SMT) well in the last five years. It has delivered a total return of 217%, while its benchmark has risen by 99%. Outperformance has been present in each of the last five years, which shows that the company’s management team has a strong track record of consistently high performance.
One major reason for the outperformance has been the company’s focus on the US. It has 47% of its holdings in US-listed companies, and with the S&P 500 having moved 70% higher during the period, it has provided a sizeable tailwind.
Looking ahead, more gains could be due for the S&P 500. Donald Trump is still aiming to put in place significant increases in spending as well as lower taxes during his time in office. This could create further stimulus for the economy and lead to higher profitability for companies operating in the country. Although the Scottish Mortgage Investment Trust trades at a small premium to its net asset value of 0.65%, it could prove to be a sound buy for the long term.
Of course, the UK stock market has also performed relatively well in the last five years. The FTSE 100 is up by 22% during the period, with it benefitting from a weak pound in the last year. This has helped UK-focused companies such as the Lowland Investment Company (LSE: LWI) to post strong returns. It has recorded a total return of 75% during the last five years, which is well ahead of the main index.
The trust’s future appears to be bright. The pound could weaken yet further if uncertainty surrounding Brexit continues to build. Certainly, there is scope for an interest rate rise in the near term. But even so, a loose monetary policy looks set to stay as the Bank of England remains concerned about the potential for economic growth.
This could provide investment opportunities across a range of stocks and could mean that the Lowland Investment Company continues to perform well. Trading on a discount of 8% to its net asset value, now could be the right time to buy it.
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Peter Stephens does not own shares in any of the companies 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.