Today I’m looking at to FTSE 250 investment trusts that I’ve recently bought for my personal retirement portfolio.
First up is the British Empire Trust (LSE: BTEM). I believe this is one of the best investment trusts today that you can buy to protect your portfolio from market volatility.
The trust is unlike many of its peers because it doesn’t pick shares to try and beat the market. Instead, the firm invests in other investment vehicles that are trading at what it believes to be a substantial discount to their full intrinsic value. In some cases, management then works with these undervalued instruments to help unlock value for shareholders and investors.
This approach has yielded fantastic results for investors over the past few decades. British Empire has been around in one form or another since 1889, and according to the most recent performance data (30 June 1985 to 30 April 2018), the total return net of fees to investors is 12.1% per annum.
Unfortunately, if you are looking for dividend income, this might not be the trust for you. The shares only yield 1.6%, according to the firm’s website. Still, the capital returns produced over the past four decades more than make up for this lack of income in my opinion.
The power of compounding
My next pick, Witan Investment Trust (LSE: WTAN) is, in my view, appealing for many of the same reasons.
Founded in 1909, this company has achieved 43 years of consecutive dividend growth with the payout more than doubling over the past 10 years. At the time of writing the shares support a dividend yield of 2.1%.
Witan does invest in single companies, but the trust has a global investment mandate and invests wherever there is value to be found. Right now, only a third of the portfolio is invested in the UK while 22% is devoted to European equities, and 21% is invested in North American equities. The rest is placed across the world with the focus on Asia Pacific.
And the team at Witan has more than proved that it knows what its doing over the past decade. Since 2008 shares in the trust have returned 11.5% per annum.
It is this double-digit annual return that has really got me excited about the prospects for my retirement portfolio. According to my calculations, thanks to the magic of compounding, if Witan and British Empire continue to produce annual returns of between 11.5% and 12.1%, I only need to invest £250 a month to be able to retire with a pension pot of £1.5m in 35 years time.
Of course, this assumes that the bull market we are currently in continues on for the next three decades, which is unlikely in my opinion.
That being said, with four decades of over-performance behind it, I’m confident that British Empire at least can continue to produce double-digit returns for investors every year, no matter what the market has in store for us.
Rupert Hargreaves owns shares in the British Empire Trust and Witan Investment Trust. 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.