Saving for a comfortable retirement is vital, so you do not want your portfolio idling in the slow lane. The following two investment trusts should help you give it a bit more gas.
HG Capital Trust (LSE: HGT) gives you exposure to a fast-growing portfolio of more than 30 unquoted investments, primarily in technology and technology-enabled services across Europe, plus two renewable energy funds. This is a racy remit and HG aims to deliver a return in excess of the FTSE All-Share over the longer run. It has delivered in style, with a historic return of 1.6 times the index, and long-term annual compound growth of 10.4% a year over the last decade.
Last month, HG Capital Trust posted a 12.1% rise in net asset value in the six months to 31 August against 5.5% on the All-Share. Today’s update shows the share price rising a meaty 16.9% over the past 12 months. It now has £674m under management and a market cap of £609m, which leaves it trading at an attractive 9.6% discount to net asset value.
In Capital we Trust
Even investors who like to make their own direct equity choices should consider a trust like this, because it gives you a broad spread of under-the-radar stocks. HG is a private equity firm that targets middle-market buyouts primarily in European technology, media and telecomunications. Top holdings include Visma, IRIS, Sovos Compliance, CogitalGroup, Mitratech and other relative minnows. The fund is 50% invested in the UK, but also has 19% exposure to Scandinavia, as well as Northern Europe and the US.
On a cumulative basis, this fund will have more than doubled your money over five years, according to TrustNet.com. It also offers a dividend yield of 3.65%, which is attractive. This is a very nice portfolio diversifier that has proven its merits over the longer run.
Big in Japan
For further diversification, have you considered Japan? After a long, cold winter Japan-focused funds have been making hay in the rising sun, and few more so than Baillie Gifford Japan Trust (LSE: BGFD). Over five years, it has produced a cumulative return of 275%, Trustnet shows, while its benchmark Japan Equities index returned ‘only’ 175% over the same period.
Perhaps this is to be expected, given that the trust invests in medium-to-smaller-sized Japanese companies, which will often outpace the wider market during strong growth periods. But it still opens up an exciting new area that many investors may have overlooked. Latest performance figures for the year to 31 August are hugely impressive. During this time, the trust’s net asset value rose 27.6%, while the benchmark index gained 18.8%. In this period the company’s share price increased a thumping 37.5%.
There are a few potential hiccups. The fund has been managed by Sarah Whitley since 1991, but she is due to retire in April after 27 years. Also, it trades at a premium of 4.51%, a tribute to its recent stonking growth. Finally, you are coming late to the Japanese recovery party, which cannot go on forever. However, Baillie Gifford Japan Trust still looks a great way to plug any regional gap in your portfolio.
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Harvey Jones has no position in any of the shares 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.