The COVID-19 outbreak has sent shockwaves around the world. While the virus hasn’t had that much of an effect on the economy (as of yet), the uncertainty has spooked investors. At this sage, we don’t know how bad the situation could become.
This is a challenging environment for investors to navigate. However, there are a couple of funds that stand out right now as safe harbours in rough waters.
Personal Assets Trust
The Personal Assets Trust (LSE: PNL) is a relatively unique investment trust. Its goal is to protect and grow the wealth of its investors over the long term. Management places emphasis on the protection part of its investment mandate.
As such, inflation-linked bonds and precious metals feature heavily in the trust’s portfolio. Commodities and fixed income securities currently make up more than two-thirds of the collection. The trust also owns a selection of high-quality blue-chip stocks.
If you’re looking for an investment fund that’s trying to beat the stock market, Personal Assets isn’t for you. However, if you’re looking to protect and grow your wealth, it could be worth considering.
Over the past 10 years, it’s achieved an average annualised return of 5.8%, with relatively minimal volatility.
A dividend yield of 1.3% provides a level of income that exceeds most savings accounts, and an annual management fee of 0.65% is relatively low.
Scottish Investment Trust
The Scottish Investment Trust (LSE: SCIN) is another trust that’s structured to outperform in all market environments, billing itself as a contrarian investor. It likes to buy out-of-favour stocks, which are in the process of restructuring. It also aims to provide dividend growth ahead of UK inflation.
Research shows value stocks tend to outperform in volatile markets. Meanwhile, growth stocks suffer the most as investors usually rush to sell these holdings first. This suggests Scottish could produce market-beating returns in the current environment.
Indeed, the most substantial holdings in the trust’s portfolio as some of the most defensive stocks around. These include Tesco, gold miner Newcrest and GlaxoSmithKline.
Management has also shown willingness to deploy extra capital repurchasing shares when they’re trading a significant discount to net at a value, which enhances returns over time.
The investment trust currently supports a dividend yield of 3.1%, is trading at an 11% discount to net asset value, and charges just 0.58% per annum in management fees.
Henderson International Income Trust
The great thing about dividend stocks is that they can give you a steady income in times of market volatility. That’s why the Henderson International Income Trust (LSE: HINT) has to feature on a list of top investment trusts to buy in the current environment.
It owns some of the most highly-regarded income stocks in the world, including Microsoft, Coca-Cola and Nestle. It currently offers a dividend yield of 3.7% and is trading at a slight discount to the net asset value.
Since the trust was launched in 2011, its net asset value as grown by nearly 90%, including dividends.
That suggests this trust can provide a steady return for investors in all marketing environments. With an annual management fee of 0.84%, it doesn’t charge the world for this performance either.
For long-term dividend-focused investors, this trust seems to tick all the boxes.
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Rupert Hargreaves owns shares of the Henderson International Income Trust, Personal Assets Trust and Scottish Inv Trust. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline and Microsoft. The Motley Fool UK has recommended Tesco and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. 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.