However, in the long run such times can be the best periods in which to invest. It may be possible to obtain better value shares than usual, since most investors may be selling as opposed to buying.

With that in mind, here are two investment trusts that appear to offer good value for money. They could generate high total returns in the long run and may therefore be worth a closer look.

Strong performance

Reporting on Tuesday was Manchester & London Investment Trust (LSE: MNL). The first half of its financial year saw a total return to shareholders of 13.5%. This was significantly higher than the increase in its benchmark of 4.7%, with sector positioning driving its outperformance of 8.8%.

Technology investments contributed a 14.8% return, while consumer investments delivered 5.2% of total returns. The former was boosted by exposure to technology majors, with the industry enjoying generally positive performance as investor sentiment has remained buoyant. And with around 88% of its consumer investments return being driven by the company’s holding of Amazon shares, the trust has enjoyed significant success during the period when it comes to sector positioning.

Looking ahead, Manchester & London notes the recent volatility in global markets. However, with it having a strong track record versus its benchmark and trading at a 4% discount to net asset value (NAV), it seems to offer a worthwhile risk/reward ratio for the long term.

Long-term prospects

Also offering impressive long-term growth prospects is the Schroder UK Growth (LSE: SDU) investment trust. The company has experienced a period of underperformance versus the UK All Companies benchmark, with its rise of 1.6% in the last year representing an underperformance of 3.7%. However, the company is invested in a number of stocks which could offer strong growth after challenging periods.

For example, the five biggest holdings of the trust are Shell, Standard Chartered, BP, Tesco and Lloyds. All five companies have experienced difficulties in recent years, but now appear to offer good value for money as well as clear turnaround potential. Therefore, they could provide a strong catalyst when it comes to the future performance of the trust – especially since they make up around 31% of the total portfolio.

Since the Schroder UK Growth investment trust currently trades at a discount to its NAV of around 11%, it appears to offer a wide margin of safety. While potentially volatile in the near term as stock markets could experience further disruption, in the long run it could deliver impressive total returns. With a dividend yield of 3.4%, it may also offer an inflation-beating income return over the medium term.  

The post Looking to invest £1,000? Here are two investment trusts I’d consider appeared first on The Motley Fool UK.

More reading

• Just how cheap could IAG shares get this summer?
• Up 130% in 2026, can FTSE space stock Filtronic continue to soar?
• Are investors still using an outdated playbook to value Lloyds shares?
• Is £15 the next stop for the Rolls-Royce share price?
• How much is £7,620 saved in a Cash ISA a decade ago worth today?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Peter Stephens owns shares of BP, Lloyds Banking Group, Royal Dutch Shell B, Standard Chartered, and Tesco. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended BP, Lloyds Banking Group, Royal Dutch Shell B, Standard Chartered, and Tesco. 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.

Other investment funds, like unit trusts where we hand over our cash to be managed for us, often have to satisfy their owners foremost, so there’s an inevitable conflict with customers’ interest there.

But investment trusts are different in that, when you invest, you don’t hand over cash to the company, you buy shares in the company itself – so you are one of the owners.

There’s an additional advantage in that investment trusts are allowed to smooth their dividend payments over multiple years, which can be great for those seeking regular income.

Global blue chips

The Manchester & London Investment Trust (LSE: MNL) has had a few erratic years, and its dividends have actually been fluctuating.

But the trust is aimed at “achieving capital appreciation, together with a reasonable level of income“, and the share price has been storming ahead. At 393p, it’s overtaken the FTSE 100 very nicely in the past three years, with 2017 being exceptionally strong so far.

Its investments are targeted mainly at blue-chip shares in developed markets which are growth orientated, and it holds a portfolio of only 20 to 40 securities. That, together with recent global economic conditions, seems likely to make it more volatile than others. But at the same time, I prefer a focused portfolio as the best way to long-term growth.

The year to July 2017 saw a total return per share of 92.4p, sharply up 48% from last year’s 62.5p. On top of that, net asset value (NAV) per share rose by 25% to 429p.

Revenue return per share did drop by 41% to 7.9p and the total dividend fell 33% to 9p. But it’s a relatively small proportion of overall returns, and it still provided a yield of 2.3%.

For a trust focussing on growth rather than maximum income, that looks like a very good performance to me, and the shares are now trading on a discount to NAV of 8.4%.

Closer to home

Big Yellow Group (LSE: BYG) is a real-estate investment trust (REIT) which invests in storage facilities in the UK, and has been raking in the cash for years. 

It definitely looks better suited to those seeking regular and rising dividend income, with the annual payment having climbed from 11p per share for the year ended March 2013 to 27.6p by 2017. That’s a 2.5-fold increase in just four years, and well ahead of inflation. And forecasts for the next two year suggest a further 19% hike by March 2019.

On top of that, the share price has also been storming ahead of the FTSE 100, and at 803p as I write, it’s put on 140% over the past five years.

The firm’s first-quarter trading update in July showed modest but steady progress, with occupancy rates growing to 82% (from 78% at the same stage a year previously). Big Yellow’s target rate of 85% looks to be in reach, and that would be impressive.

Finding new sites seems to be the company’s biggest problem at the moment, but that doesn’t seem to me to be such a bad one – it certainly boosts confidence in demand for its services.

Full-year results will be with us on 1 November, and will be worth looking out for.

The post Two Footsie-beating investment trusts that could make you a millionaire appeared first on The Motley Fool UK.

More reading

• Just how cheap could IAG shares get this summer?
• Up 130% in 2026, can FTSE space stock Filtronic continue to soar?
• Are investors still using an outdated playbook to value Lloyds shares?
• Is £15 the next stop for the Rolls-Royce share price?
• How much is £7,620 saved in a Cash ISA a decade ago worth today?

Alan Oscroft 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.