The right investment trust can make you a millionaire… if you give it time. It won’t happen overnight, but with a bit of luck (and a bit of patience), that million could be yours. Here are three that have done the job.
Thanks a million
Making a million from investing is easier if your investments can roll up free of tax, so make good use of your £20,000 tax-free ISA allowance before it expires at midnight on 5 April.
Somebody who had invested their maximum stocks and shares ISA limit every year since the scheme launched in April 1999 will so far have contributed £186,560. If they had invested that in the average investment trust every year, they would now have a pot of £436,894, a whopping £250,334 gain in less than 20 years!
Some funds have done far better, with the very best being Aberdeen New Thai (LSE: ANW). It’s a lesser-known specialist trust with an NAV of 677p per ordinary share with a market cap of c.£95 million that invests 100% in Thai equities. The trust, listed in the Country Specialists: Asia Pacific sector, would have turned your ISA payments into a cool £1,050,638, more than five times your original investment, according to research from the Association of Investment Companies (AIC), using Morningstar data.
Despite this, the trust trades at a large discount of -15%. My own research shows that recent performance has been less spectacular, with the fund up just 21.4% over the last five years, according to Trustnet.com, against sector growth of 110.4%. This is less than surprising given recent political upheavals, which saw the Thai army seize power in a coup in 2014. Current uncertainty may make it a good time to invest, depending on where you think Thailand is heading now.
Baillie Gifford Shin Nippon (LSE: BGS) — in the Japanese Smaller Companies sector — is the next investment trust millionaire maker, turning maximum ISA contributions into £986,344. In contrast to Aberdeen New Thai, the last five years have been a dream, returning an incredible 261.1% against 150.8% across its sector, Trustnet shows.
Success comes at a price. In this case, a massive premium of 9.84% to underlying NAV. But if you think the Japanese recovery has further to run, this £861m NAV trust could be the place to start.
The third millionaire maker (give or take £37,034) came as a surprise to me. Acorn Income Fund (LSE: AIF), in the UK Equity & Bond Income sector, delivered the third highest return on any investment trust at £962,966. This little-known offering from Premier Fund Managers, which has a NAV of just £441m, aims to provide high income from a portfolio of small- and mid-cap companies, plus capital growth. It currently yields 4.18%.
The trust targets companies under a £1bn market-cap with experienced management, sound operational controls, good cash generation and a progressive dividend. Recent performance has been strong, with growth of 88.3% over five years against 60.6% across its sector. It’s also trading at a premium, this time 5.87%.
As ever, past performance is no guarantee of future returns, but all three trusts have an impressive track record. Good luck with that million!
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.