MENU

Have £1,000 to invest? These market-beating investment trusts could help you retire early

Image source: Getty Images.

Today investors have more options than ever before when it comes to deciding where to invest their money. But despite the range of investments on offer, I believe that investment trusts remain the most attractive option for those looking to invest for the long term. 

Investment trusts have changed little in the past 100 years, and in my opinion, this is their greatest advantage because it fosters a long-term mindset among investment managers. For example, Witan Investment Trust (LSE: WTAN) was admitted to the primary market in 1950 and ever since, management has worked to achieve the best returns for investors. 

Retirement planning 

Witan went public in October 1950, but the company has been in operation since 1909. Over this 109 year history, the firm has created hundreds of millions of pounds in value for investors. Over the last 10 years alone, shares in the trust have returned 231%, compared to the benchmark return of just 145% (as Witan invests all over the world, its benchmark is a composite of several global indices). 

Investment success has helped Witan outperform. Dividend growth and share buybacks have also helped. The company recently announced (July 13) that management has been granted the authority to buy back 26.7m shares, approximately 13% of the total number of shares in issue. On top of this, Witan is a dividend aristocrat. The firm has increased its dividend annually for the past 43 years. 

Today, it unveiled yet more good news for investors. Its half-year results, for the six months to the end of June, show a 1.11% increase in net asset value, slightly above the benchmark return of 1.06%. Net asset value increased 6.5% year-on-year to 1,110p. 

Based on the above figures, shares in the trust are currently trading at a slight premium to net asset value. Still, I believe it is worth paying a premium to invest alongside Witan’s investment managers, who have shown over the past few years that they are capable of beating the market. The dividend yield stands at 2%. 

Small-cap growth 

If like me, you already own Witan, then another trust worth considering for your investment portfolio might be F&C Global Smaller Companies (LSE: FCS)

F&C invests directly in smaller companies and buys stakes in other top-rated funds that invest in small-caps around the world. Today, F&C’s top holding is the Eastspring Investments Japan Smaller Companies fund, which accounts for 5% of net asset value. 

In my view, having some exposure to small-caps is essential if you want your portfolio to make money. According to a study by wealth manager Schroders, global small-caps have returned almost three times as much as large companies over the last 16 years.

By including F&C in your portfolio, you can gain exposure to this trend in just one click. The firm has global exposure to small caps, 40% of assets are focused and the remainder is spread across the UK, Europe and internationally. 

The shares currently trade at a slight discount to net asset value of -1.3% and the annual management charge is 0.8%. A dividend yield of 1% is on offer. 

Overall, I believe F&C is the perfect instrument to add to your portfolio if you want to benefit from small-cap growth. 

Want To Retire Early?

Do you want to retire early and give up the rat race to enjoy the rest of your life? Of course you do, and to help you accomplish this goal, the Motley Fool has put together this free report titled "The Foolish Guide To Financial Independence", which is packed full of wealth-creating tips as well as ideas for your money.

The report is entirely free and available for download today, so if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Rupert Hargreaves owns shares in the 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.