It’s been another bumper year for some stocks and shares with plenty of weird and wonderful things happening. Although it’s not all been good news, some investment trusts have performed exceptionally well.
In this article, I’m going to walk you through the top-performing funds of 2021 and suggest some things to look out for when choosing investments.
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What are the best-performing investment trusts of 2021?
According to newly released data from Interactive Investor, these are the 10 best-performing investment trusts so far in 2021:
| Position | Investment trust | Category | Performance (Dec 2020 to Dec 2021) |
| 1 | Geiger Counter (GCL) | Nuclear Energy | 234.4% |
| 2 | Schiehallion Fund (MNTN) | Private Equity | 119.8% |
| 3 | Vietnam Holding (VNH) | Vietnam Equity | 102.4% |
| 4 | Chelverton Growth Trust (CGW) | AIM Equity | 82.1% |
| 5 | Alternative Liquidity Fund (ALF) | Global Multi-Asset | 76.1% |
| 6 | NB Private Equity Partners Class A (NBPE) | Private Equity | 74.1% |
| 7 | Riverstone Energy (RSE) | Energy | 70.4% |
| 8 | India Capital Growth Fund (IGC) | Small-Mid Cap India Equity | 62.9% |
| 9 | AEW UK REIT (AEWU) | Property | 60% |
| 10 | Tufton Oceanic Assets (SHIP) | Physical Assets | 58.5% |
Should price performance be the only thing you look for in an investment trust?
Price performance is important, but it’s not necessarily the only thing you should look for. As an investor, you’re probably looking for at least some growth of your capital. However, different investment trusts have different objectives.
This means that not all funds are racing against each other to hit the highest gains. Some investment trusts will focus on paying an income, which tends to be a much lower but more stable return. Others may have a conservative approach, simply looking to beat inflation.
It’s also worth keeping in mind that these funds can have a very specific or narrow focus on one industry or country. In some years, certain areas of the market will perform better than others and it can often be impossible to predict what areas will see the best performance.
Past performance doesn’t dictate future results, and just because a particular investment trust is having a good year, this doesn’t mean the fund will perform just as well over the next year.
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How can you find the best investment trusts?
Although past performance doesn’t predict future returns, it can be a good idea to take a peek at how a fund has performed over five to ten years. This can give you a better picture of its overall performance.
Another useful trick is to see how the trust has done during times of trouble. I always like to take a look at how funds performed from 2007 to 2009. Because this was a period of severe economic depression, it gives me a glimpse at a worst-case scenario situation.
This method obviously isn’t bulletproof. But I can get a sense of how volatile a fund might be during a downturn. It’s easy to look at funds when things are going well, but seeing who survives the bad times can be a truer test of their metal!
What else do investors need to know about investment trusts?
As with any investment, it’s always good to diversify. So a useful strategy can be to pick out a number of different investment trusts that have a range of objectives. Lumping all of your money into just one can leave you at risk of too much concentration.
Making sure you have enough investment choice is why it’s worth using a top-rated share dealing account that gives you lots of options to suit your style. You should also consider using something like Interactive Investor’s Stocks and Shares ISA to hold your investment trusts. Doing this could mean avoiding tax on growth or income from your funds.
Remember that all investing carries risk. So, research your choices carefully and keep in mind you may get out less than you put in. And if picking your own funds and investments feels too daunting, using a robo-advisor might be a more straightforward approach for you.
