Monks diversification

Looking at the holdings as of April 2021, it is clear the trust ran by Spencer Adair has a diversified portfolio. Top holdings included companies such as Amazon, Ryanair, and Prudential. This offsets risk, as it allows the trust to maintain a balanced position in multiple sectors. Comparing this to SMT shows the benefits this can provide, as at times this year SMT has suffered due to the tech sell-off.

The idea of diversification also applies to the sector analysis of the investment trust. With technology at the top with over 23%, further down sits health care (13.5%) and other sectors such as real estate (2.9%). Again, this shows the opportunities Monks provides through its diversification. Add to this the ongoing charges of just 0.48%, and I see plenty of potential here to access an array of sectors for a cheap price.

Another factor I really like about Monks is its investing strategy. The trust is focused on long-term capital growth, taking a priority over income. A patient approach suits my investment style, and as such I see real opportunities in this investment trust. I only must look at the 205% return over the past five years to see this in action. Of course, past performance is not an indication of future returns.

Monks risks

With all that said, there are risks to consider. First, the trust has a large weight in US stocks. As of April, this was nearly 50%. This could cause issues, because if the US market underperforms, the investment trust may also underperform.

The trust also has nearly 15% of its holdings in emerging markets, a factor that could cause problems due to ongoing Covid-19 struggles in countries such as India and Brazil. With this said, a long-term outlook should not be affected by potential short-term volatility – and as such, I do not see this as a major issue.

Why I’m buying Monks

Although the trust does come with risks, I believe the opportunities outweigh these potential problems. A long-term outlook is something I look for when investing.

I also like the diversification the trust can add to my portfolio. It offsets risk by allowing me to access a wide variety of sectors and countries. I also am a fan of its relatively large proportion of holdings in emerging markets. The pandemic has had a major impact on these countries, but I think, long-term, these markets can provide great opportunities for capital growth.

The post Why I’m buying this top investment trust for long-term growth appeared first on The Motley Fool UK.

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Charlie Keough owns shares in Scottish Mortgage Investment Trust. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Prudential and has recommended the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. 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.

Diversified investment trust

As it sounds, the Pacific Horizon Investment Trust (LSE:PHI) is focused on increasing investors’ wealth through buying what its managers consider to be the best growth shares in the Asia-Pacific region and Indian Sub-continent.

Understandably, stocks from big markets such as Hong Kong and China take up roughly a third of the trust’s assets. Another 20% is invested in India. Further down, holders get to own shares from economies such as Vietnam and Indonesia. 

This suits my own investing objectives. While most of my cash remains invested in developed nations, I do want some exposure to those that have very attractive prospects going forward thanks to the rising affluence of their populations. 

With between 40 and 120 holdings at any one time, the trust isn’t overly dependent on a few companies succeeding either. Based on its most recent factsheet, its biggest position is in Singaporean internet giant SEA Limited. Indian carmaker Tata Motors and base metals miner MMG Limited take second and third spots respectively. 

Opportunity?

Up until very recently, PHI has been knocking the ball out of the park. From the March 2020 market crash to mid-February 2021, the share price rocketed roughly 250%. That’s the sort of performance I might get from small-cap companies! Since then, however, it’s lost momentum. 

As much as I see this as an opportunity, buying now is not devoid of risk. Past performance is, after all, no guide to the future. It’s quite possible that the recent weakness seen in the share price will continue for a while if, for example, the pandemic continues to ravage India.

There’s also the 0.92% management fee to consider. Pacific Horizon Investment Trust’s recent returns might dwarf those of an emerging markets index fund but the latter is a far cheaper alternative.

Worth the risk

I think these risks are worth the potential rewards. Timing the market sounds great in theory. However, it’s difficult to do consistently in practice. So, I’ll drip-feeding money into PHI. That may not be the optimum strategy if its share price rises from here. However, it makes the buying process less challenging psychologically. 

With regard to the fees, I’m content to assume that the investment trust’s managers know this part of the global market better than I do. Backing this up, PHI has an active share of 91%. This means its managers are actively picking stocks rather than just tracking one or more indexes. The higher this active share percentage, the more confident I can be that the managers are at least attempting to generate better returns.

As well as offering geographical and sector diversification, PHI can also buy in to private companies like its hugely popular Baillie Gifford peer Scottish Mortgage Investment Trust. This is something passive funds won’t be able to replicate and could make a big difference to performance. 

Long-term hold

The Pacific Horizon Investment Trust is unlikely to generate the same performance in 2021 as it did last year. Even so, I see this as another solid ‘buy-and-forget’ addition to my portfolio. I hope buying now could still lead to great returns over the next 10 years.

The post 1 of the best investment trusts to buy now! appeared first on The Motley Fool UK.

More reading

• £15,000 invested in red-hot Scottish Mortgage shares 1 month ago is now worth…
• Are IAG shares the ultimate FTSE 100 volatility play? 
• Will the stock market go off like a rocket on Monday?
• Here’s what £15,000 invested in Taylor Wimpey shares on Thursday is worth today…
• How much would it take to turn an ISA into a £1,000-a-month passive income machine?

Paul Summers owns shares in Pacific Horizon Investment Trust and Scottish Mortgage Investment Trust. The Motley Fool UK owns shares of and has recommended Sea Limited. 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.