The Motley Fool

Have £1,000 to invest? These investment trusts are absolutely crushing the FTSE 100

Image source: Getty Images.

Fund managers are often criticised for charging high fees yet also failing to deliver market-beating returns. But while many actively managed funds trail the market, there are few out there that have deservedly earned their fees after having massively outperformed the market over extended periods of time.


One such fund is the Lindsell Train Investment Trust (LSE: LTI). Shares in the multi-asset investment trust have delivered a total return of 233% over the past five years, allowing it to easily surpass the performance of its benchmark MSCI World Index, which gained just 76% in sterling terms. The FTSE 100 has fared even worse, with a total return of just 40% over the same period.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

This one seeks to maximise long-term total returns by investing in a diversified portfolio of financial assets, including equities, and other Lindsell Train funds. But what really sets this trust apart from others is that it also owns a significant minority stake in its investment manager, Lindsell Train Limited.

This 24% stake in the investment management company co-founded by Michael Lindsell and Nick Train accounts for 43% of the value of its portfolio. However, with such a large position in a single unquoted investment, those who invest in the trust are highly exposed to fluctuations in the valuation of that single company. And although its position in Lindsell Train Limited has no doubt played a big role in the fund’s recent outperformance, past performance may not be indicative of future returns.

One important reason to be cautious is the high premium at which its shares trade against the underlying value of its assets. Shares in the trust are among the most expensive in the investment trust market — currently trading at a 41% premium to its net asset value (NAV), which is considerably higher than its 12-month average premium of 26%.

Although this reflects strong investor sentiment towards the fund, due to faith in management’s ability to outperform the market, the risk of losing money should the trust fall out of favour is greatly amplified.

Japan smaller companies

Baillie Gifford Shin Nippon (LSE: BGS) is another fund that has massively outperformed the FTSE 100. It aims to deliver attractive long-term capital growth by investing in value stocks in Japan’s small-cap space.

Shin Nippon, which means ‘new Japan’ in Japanese, has achieved this outperformance by focusing on fast-growing Japanese companies with innovative business models and dynamic management teams. The trust has a fantastic stock picking track record, and has achieved a five-year total return on 216%.

Its job has been made easier by the fact that many smaller Japanese companies have no broker coverage at all. This limited availability of sell-side coverage provides inefficiently priced opportunities which may be uncovered by the fund’s in-house research team.


Of course, the yen’s strength against the pound (or more correctly, sterling’s weakness) has also been an important contributor to the fund’s performance — but that doesn’t explain it all. This is because the trust has also significantly exceeded the gain of its benchmark, the MSCI Japan Small Cap Index, which achieved a return of 98% in sterling terms over the same period.

Shares in the trust trade at a 6% premium to NAV, which seems reasonable, being in line with its 12-month average premium of 5%.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Jack Tang has no position in any 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.