Foreign & Colonial

The renowned F&C Investment Trust (LSE: FCIT) was launched way back in 1868, just over 150 years ago. It’s now worth £3.66bn and aims to deliver long-term capital and income growth by investing in an internationally diversified portfolio of equities, as well as unlisted securities and private equity.

Recent performance has been good – it’s grown 99% over the past five years, against 77% for its global benchmark index. It even grew 8.8% over the last 12 months, at a time when most indices actually fell. So it isn’t just living off its history and reputation.

Tech heavy

However, one reason for this success is its outsize exposure to the US stock market, which has beaten most others in recent years. Some 50% of the fund is invested in the States, so maybe skip this if you already have enough US exposure. Top 1o holdings include US tech giants Amazon, Microsoft, Google owner Alphabet and Facebook, so you can probably guess where recent strong growth has been coming from.

Growth is nonetheless impressive, and F&C also gives you exposure to Europe, emerging markets, Japan and the UK. The trust trades at an average discount of 6.8% to its net asset value, but that has currently narrowed to 1.47%, suggesting it is in demand right now. An ongoing charges figure of 0.79% isn’t too expensive.

Your decision partly depends on where you want to put your money. The UK is relatively undervalued, for example. But F&C Investment Trust could be a good one-stop fund, if you’re happy to go large on the US.

Buy British

While F&C was the original investment trust, plenty more were launched at the tail end of the 19th century, including the British Empire Trust (LSE: BTEM). It was incorporated in London in 1889 as The Transvaal Mortgage, Loan and Finance Company Limited, with the aim of investing in the hot emerging market opportunity of the period – the Transvaal colony of southern Africa, a region rich in minerals and resources.

It’s now a globally diversified investment trust with nearly £1bn in assets and now follows what investment manager Joe Bauernfreund calls a “unique strategy of investing in asset-backed companies, including holding companies, closed-ended funds, property companies and, as of June 2017, cash-rich Japanese companies.” So its top holding is Japan Special Situations, which makes up 15% of the entire fund.

Global power

British Empire Trust is also in the global investment trust sector, but is less top-heavy with US stocks. In fact, its largest exposure is to Europe, at 26%, followed by North America, at 24%, then Asia-Pacific and Japanese equities, both 18%. The UK is a measly 1% which could give you much-needed diversification from these shores. It also means that these two funds could balance each other quite nicely. Otherwise, here are two more esoteric global investment trusts to consider.

The post I’d buy and hold these 2 global investment trusts for 100 years appeared first on The Motley Fool UK.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. harveyj has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, and Facebook. The Motley Fool UK owns shares of 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.

Investment trusts

For those on the hunt for reliable income, it may be worth considering investment trusts as a way to get exposure to the stock market. An advantage that investment trusts hold over open-ended funds, such as unit trusts, is their ability to hold back some of the dividend income they earn each year. This enables them to draw down on their reserves to smooth out income payments during more difficult periods.

The Foreign & Colonial Investment Trust (LSE: FRCL) is one such investment trust which has paid a dividend every year since its inception 150 years ago. What’s more, it has also been growing its dividend for 47 consecutive years.

Broad exposure to global markets

The F&C fund is well-balanced and geographically diversified with broad exposure in international markets and across various industries. This one-stop shop approach makes it a potentially attractive core holding for a starter portfolio, or for those investors seeking to increase their portfolio diversification.

With Brexit uncertainty continuing to overhang on UK economic growth, the fund has continued to cut its exposure to domestic stocks. Its portfolio of UK stocks account for less than 5% of its total assets, down from the 29% in 2013.

North America is its biggest geographical exposure, with 34% invested there. This is followed by Europe (excluding theUK) at 13%, emerging markets (11%) and Japan (9%). It has a further 23% invested in its multi-manager Global Strategies portfolio and 6% in private equity funds.

Shares in the investment trust have a current dividend yield of 1.5%.

Direct property and equity

Meanwhile, the Value and Income Trust (LSE: VIN) has a more unique offering, investing both in UK equities and direct property. By combining investments in these two areas, the fund aims for long-term real growth in dividends and capital value without taking on too much undue risks.

Property investments account for a growing proportion of its assets and currently represents a little more than a third of its portfolio value. The trust focuses on higher yielding, less fashionable areas of the UK commercial property market.

It has a preference towards assets with long, stable income streams, particularly those benefiting index-linked rent reviews. Such index-linked leases account for 62% of the portfolio’s rental income, affording it substantial protection against inflation. And to further underscore its risk-averse culture, the property portfolio has a long average unexpired lease length of 14 years, with investments being funded for many years by long-term fixed rate loans.

High yield

In the equity space, it’s invested in a diversified portfolio of primarily high-yield stocks, which includes many medium- and smaller-sized companies. Its largest equity holdings include Beazley, Unilever, Halma, BP and Legal & General.

Trading at an 18% discount to its net asset value (NAV), shares in the Value and Income Trust are attractively priced. Dividends per share for the trust grew by 3.6% to 11.4p this year — marking its 31^st consecutive year of dividend growth, and giving shares in the trust a yield of 4.2%. 

The post 2 top dividend hero investment trusts for an uncertain market appeared first on The Motley Fool UK.

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Jack Tang has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Halma. 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.

Now, Buffett isn’t referring to short-term movements of share prices but to permanent or near-permanent losses for investors due to a poor business or poorly managed business. However, if we invest in top-quality businesses at a fair price, we should enjoy the rewards long into the future. Buffett’s investment in The Coca-Cola Co is a classic example. Looking to the FTSE 100, I would put Unilever (LSE: ULVR) in the same category.

Excellent value

As a global giant with a stable of trusted food and household brands, Unilever boasts excellent profit margins, prodigious cash generation and a superb long-term record of shareholder returns. Over the past 10 years, it has delivered an annualised total return of 10.9%, compared with 5.8% for the FTSE 100. I see no reason why the company cannot continue to deliver for investors for decades to come.

Warren Buffett-backed Kraft Heinz made a 4,000p-a-share bid for Unilever just over a year ago. As I’m writing, Unilever’s shares are trading at under 4,000p. This is not only below the level Buffett was prepared to pay, but also about 12% below last year’s high. I believe now could be a great time to buy a slice of the business.

When I wrote about the company earlier this year, the share price was at a similar level as today and the valuation was 19 times forecast 2018 earnings with a prospective 3.4% dividend yield. I consider Unilever’s shares to be excellent value when the forward earnings multiple is below 20 and the yield is above 3% and that remains the case today.

One-stop shop

While I see Unilever as an excellent pick for investors looking to build a small portfolio of high-quality businesses to buy and hold forever, I would choose Foreign & Colonial Investment Trust (LSE: FRCL) if I were looking for a one-stop shop. It tags itself “The original investment trust”. Indeed, it’s the oldest collective investment fund and has paid a dividend every year since its inception 150 years ago.

Foreign & Colonial doesn’t try to do anything too clever or risky but gives investors broad exposure to long-term global growth. Its £3.7bn assets are invested in over 500 stocks in 35 countries. Its largest holding, Amazon, has a weighting of just 1.8% of the portfolio, so individual stock risk is low. Other familiar names in the trust’s top 20 holdings include Microsoft, BP and Pfizer, but it also has some exposure to emerging markets stocks and private equity.

Over the past 10 years, Foreign & Colonial has delivered an annualised total return of 10.5%, or 9.4% on a net asset value (NAV) basis. The shares currently trade at a small discount to NAV, which I’d be happy to buy at, while a running dividend yield of 1.6% could grow into a substantial income stream over the long term.

The post One FTSE 100 stock and one investment trust I’d buy and hold forever appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK owns shares of and has recommended Amazon and Unilever. The Motley Fool UK has recommended BP. 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.

Starting point

These two investment trusts offer ISA investors a broad spread of global stocks and shares that could neatly overlay your existing portfolio. So if time is tight, you can dive in pretty quickly rather than working out how they fit in with your existing investments. Alternatively, if you’re a newbie investor, these two high-powered trusts could give you a one-stop portfolio with a single double swoop.

Both have a tremendous history. Foreign & Colonial Investment Trust (LSE: FRCL) was launched way back in 1868, while Monks Investment Trust (LSE: MNKS) unfurled its flag in 1929.

Colonial power

Foreign & Colonial aims to deliver long-term growth in capital and income by investing in an internationally diversified portfolio of stocks, plus some unlisted securities and private equity. It has a massive £3.36bn under management and currently offers a dividend yield of 1.67%. However, its growth is what catches the eye, returning 95.9% over the past five years, according to Trustnet.com, beating its global benchmark index which delivered 82.7%.

Monks, now run by asset manager Baillie Gifford with £1.6bn under management, also invests in a diversified portfolio of global stocks although its prime aim is capital growth, with a yield of just 0.17%. The growth has more than made up for that, with the trust rising a hugely impressive 126.5% over the past five years. This has been a favourite of mine for years and has amply justified my faith.

Go global

What you get in both cases is a broad coverage of global stocks, regions and markets but with the added zip of successful fund management, as well as gearing, where the fund manager borrows money to invest. Gearing can accelerate returns in the good times and losses in the bad. These trusts are no benchmark huggers as they take risks in a bid to beat the market and, as their performance shows, those risks are paying off.

Both have heaps of US exposure. Foreign & Colonial is 48.8%-invested there, while Monks stands at 44.7%. The US has, of course, performed well lately, boosting both trusts. Foreign & Colonial has relatively lower global emerging markets exposure than Monks, at 12.7% against 21%. However, they also offer roughly similar exposure to their other key regions, Europe, Japan and the UK.

Premium choice

Inevitably there is some crossover, big names such as Amazon, Alphabet and Alibaba all appear in their top 10 holdings, but differentiation as well. If I had to choose one, it would be Monks, largely due to its superior growth record. It is in demand, currently trading at a premium of 1.48%, against a 2.99% discount for Foreign & Colonial.

You could invest this year and next year’s ISA allowance and, if you keep topping them up year after year, given time and a fair wind they could make you seriously rich.

The post These 2 investment trusts could make you a last-minute ISA millionaire appeared first on The Motley Fool UK.

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Harvey Jones has no position in any of the 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.

Small caps

The BlackRock Throgmorton Trust (LSE: THRG) is classic case of a well-run investment trust going cheap right now. Over the past five years, this fund has produced a total return of 165% for investors, which compares favourably to the UK smaller companies benchmark performance of 148%.

Run by Mike Prentis and Dan Whitestone, who have been managing the fund together since 2008, it invests primarily in small- and mid-cap stocks listed on the London Stock Exchange. The top five holdings at the end of April included CVS Group, JD Sports Fashion, 4imprint Group, Dechra Pharmaceuticals and Cineworld Holdings.

The fund has a NAV of 513p per share, but trades at a price of just 429p. This indicates a discount of 16.4%, which seems unwarranted given the liquidity of its assets and its historic outperformance.

Diversified

With a low total ongoing charge of just 0.54%, Foreign & Colonial Investment Trust (LSE: FRCL) could be a savvy way to gain international exposure at a reasonable cost.

The fund’s discount may be more modest, at just 7%, but investors would benefit from the fund’s diversification, both in geographical terms and across different industries. This offers investors some downside protection from country- or industry-specific risks, which may lead to significant outperformance in the long run.

Foreign & Colonial is cautiously managed, with no single equity investment currently representing more than 2% of its total assets. The US is the top country exposure in the portfolio, with 38.8% of its total assets at the end of June (up from 35% in June 2013). Other sizeable exposure is to the UK, with 12.6% (down from the 29% it represented four years ago), followed by Japan, Ireland and Germany.

Private equity

The last investment trust worth mentioning is Standard Life Private Equity Trust (LSE: SLPE), which currently trades at a discount to NAV of 16.2%.

Private equity has been one of the fastest-growing and best-performing alternative asset class in recent years, but it is often closed off to retail investors. Investment trusts, such as this one therefore give retail investors rare access to an opportunity to generate higher absolute returns while improving portfolio diversification.

What’s unique about private equity funds is that they typically invest in unquoted companies that are in the developing stage or have under-tapped potential. The Standard Life fund holds a diversified portfolio of private equity funds, with a majority focused on European companies. 

There is at least one major downside though. Fees can be quite expensive — last year, the fund had an AIC ongoing charge of 2.33% when performance fees were included. Nevertheless, the fund still managed to deliver a total return performance of 161% over the past five years.

The post Can these discounted investment trusts help you to achieve financial independence? appeared first on The Motley Fool UK.

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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.

Foreign affairs

In 1891 the board changed its name to The Foreign & Colonial Investment Trust (traditionalists are still getting over the shock) and in 1925 widened its remit to invest in equities as well. Today, it is a £3.15bn giant with exposure to over 500 companies across the globe, and has just published its best set of annual results for a decade.

It shook-off market volatility to deliver a net asset value total return of a whopping 23.9% for the year, its best number for more than a decade, with a share price total return of 23.7%. This beat most of its peers although interestingly, its benchmark index, the FTSE All World, did better, soaring 29.6% over the same time scale.

Colonial office

Foreign & Colonial was punished by its underweight position in the highly-performing US, and some underperforming stocks as well. Exposure to private equity trailed benchmarks, while it also missed out on the rebound in resources and economically sensitive stocks. However, I don’t think many investors will be griping. 

Chairman Simon Fraser said global equity markets saw their strongest annual returns since 1999, measured in sterling terms and therefore boosted by last year’s Brexit currency crash. Over 10 years, Foreign & Colonial has delivered a total share price return of 141%, equivalent to compounded growth of 9.2% a year.

Victoriana

The Victorians built things to last and this trust is more than simply a growth monster, it is also an income machine, proudly announcing its 46^th consecutive annual rise in dividends. The proposed total dividend for the year is 9.85p per share, up 2.6% on the previous year. Despite global economic uncertainty, the board is planning another inflation-busting dividend increase in 2017.

Manager Paul Niven is positive about the prospects for the global economy, noting signs of improvement in corporate earnings for the first time in several years. “Recession is not a serious risk yet and animal spirits have still to be unleashed suggesting that this year could, once again, provide scope for considerable surprises,” he said.

Edwardiana

The trust currently yields 1.66%, which ain’t great so let’s hope for another 46 years of progression. It is trading at a discount to net asset value, currently minus 7.43%, which gives you something of a cushion. Performance is second quartile over one year and top quartile over three years, according to Trustnet.com. The annual charge is 0.79%.

I would also suggest you look at another long-standing global investment trust, the £4.67bn Scottish Mortgage Investment Trust, launched in 1909. This returned 177% over the last five years and has just secured a berth in the FTSE 100. Foreign & Colonial grew 112% over the same period and lingers in the FTSE 250. You could always buy them both.

The post Who’s the daddy? Foreign & Colonial Investment Trust plc is on a 10-year high appeared first on The Motley Fool UK.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.