With limited investment capital, the transaction costs of investing in a large number of stocks can really rack up, hurting your long-term returns. Instead, using investment trusts to access the market may be a better option. Investment trusts enable you to pool your money together with other investors, making them an easy and relatively inexpensive way to get invested in a diversified range of markets.

Global exposure

One example which seems like a perfect choice for novice investors seeking broad exposure across global equity markets is the Witan Investment Trust (LSE: WTAN).

The fund holds a well-diversified portfolio of well over 300 stocks, which spread outs its investment risk across a wide range of industries and different geographies. Additionally, no single investment currently accounts for more than 2% of its total assets, and as such, the fund’s performance does not largely hinge on a small number of stocks.

Witan is positioned strongly towards UK and European equity markets, which represent 34% and 23% of its total assets, respectively. With equity markets in the UK and Europe trading at a relative discount to the rest of the world, this puts the fund in a strong position to benefit from a possible convergence in valuations. It could also mean that its portfolio would be less vulnerable when the long-awaited correction comes.

Past performance

Witan’s past performance compares favourably against its composite benchmark, which consists of the FTSE All-Share Index and other regional and international equity indexes. Over the past five years, the trust delivered a NAV total return of 75%, which enabled it to easily beat its benchmark performance of 58% over the same period.

What’s more, the trust has an excellent dividend track record, having increased the dividend it pays to investors for 43 consecutive years. At the time of writing, shares in the trust yield 2%.

Smaller companies

For something more adventurous, F&C Global Smaller Companies (LSE: FCS) may be worth a closer look. The investment trust seeks to deliver superior long-term capital growth by investing in faster growing small-cap companies.

Although smaller companies may be inherently more risky than larger companies, investors are often well rewarded for taking the added risks. Smaller companies have historically delivered stronger relative returns over the long term, particularly during bull markets.

Global remit

Like the Witan Investment Trust, it too has a global investment remit and is geographically diversified. The fund is most exposed to North America, which accounts for 38% of its total assets. It has a further 27% invested in the UK, and 12% in the rest of Europe.

A look at the portfolio shows the trust is itself invested in other small-cap funds, and it does this to gain exposure to Japanese and Asian small-caps as its own dedicated investment team is primarily focused on companies in the UK, Europe and North America.

The long-term performance of the trust is solid, with a total NAV return of 82% over the past five years. 

The post My top investment trust buys for a starter portfolio 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.

The Scottish play

When the stock market sell-off was at its most intense this morning, with the FTSE 100 down almost 3%, one opportunity in particular caught my eye. The most excellent global investment trust Scottish Mortgage Trust (LSE: SMT) was down 5.56%, one of the biggest fallers on the index.

The main reason for the £6.23bn behemoth’s sharp drop is its relatively high exposure to the US, with 46.6% in North American equities, and the Dow Jones just suffering its largest ever single-day point fall. The trust is also 22.7% invested in China, and Asia was selling off too.

Class is permanent

There is nothing wrong with this broadly diversified one-stop investment portfolio which boasts a tremendous performance record and low ongoing charges of just 0.44% a year. I was singing its praises last July, after it had just posted its 34th consecutive annual dividend increase. It is just as good today as it was then. The only difference is that it is cheaper than it was a few days ago.

Despite today’s drop, the fund is still a whopping 188% higher than it was five years ago. It is up 30% in the past 12 months. This teaches us another lesson: temporary falls inflict less damage than you think. In the long run, stock markets shrug them off. Scottish Mortgage was launched way back in 1909, and on such a timeline today’s setback does not even qualify as a minor blip. It is, however, a major opportunity. Especially if today’s fragrant market volatility continues, and it gets even cheaper.

Witan wisdom

Last September, my Foolish colleague Peter Stephens praised another top-performing global investment company fund, Witan Investment Trust (LSE: WTN), also launched in 1909. It has done almost as well as Scottish Mortgage over the past five years, rising 111% in that time. That may be down to its higher UK exposure, with just over a third invested in domestic equities at a time when other global markets have done better. It also has around 20% invested in Europe and a similar figure in the US, and 14% in Asia-Pacific.

Witan was down 2.68% at its worst this morning, yet was still up 17% on a year ago. Short-term market swings say nothing about the fund itself, but again, present an opportunity. Until recently it was trading at a small premium, now it trades at a discount of 3.12%. So it’s cheaper than it was, but just as good. Manager Andrew Bell’s turnaround plan, which has seen the trust adopt a multi-manager approach with a dozen managers following different mandates, has borne fruit. 

Witan also has an impressive dividend track record and although the current 1.95% yield is low, there has been plenty of progression, and I expect more to come. Buy Witan or Scottish Mortgage today and hold for decades. You will soon forget today’s dip, but your portfolio will benefit from it for years to come.

The post Share price rout is a great opportunity to snap up these 2 global investment trusts 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.

As such, buying stocks with upbeat income outlooks could be a wise move. With that in mind, here are two investment trusts with strong dividend potential.

Solid performance

Reporting on Friday was student accommodation real estate investment trust (REIT) GCP Student Living (LSE: DIGS). The company was able to deliver a robust set of results for the most recent financial year, with revenue increasing from £22.5m in the prior year to £28.6m. This was backed-up with a flat operating margin of 79%, while rental growth of 3.9% shows that the company’s operating environment remains resilient.

Net asset value per share increased to 139.08p from 136.93p in the prior year. More growth on this front could be ahead as there remains considerable upward pressure on property across the UK. And since GCP Student Living has a share price of 147p at the present time, it seems to offer a wide margin of safety via a price-to-book (P/B) ratio of just 1.05. This suggests that share price growth could be ahead.

With the company having a dividend yield of 4%, it is likely to offer a positive real return over the long run. Alongside its growth potential and resilient business model, this could increase demand for its shares in future. With a continued imbalance between demand and supply within the UK property sector, the stock could be a solid buy-and-hold for the long run.

Global appeal

Looking ahead, Brexit could have a significant impact on the UK economy. Already, it has contributed to a slowing growth rate, as well as a weaker pound and higher inflation. As such, putting your money into in an investment trust with a global focus could be a sound move to make.

One that has a global outlook is the Witan Investment Trust (LSE: WTAN). It maintains some exposure to UK equities through a 37% holding of UK stocks, but also has a range of other funds and shares within its portfolio. For example, it has a 21% exposure to North America at a time when the US economy appears to be performing well. Higher spending from the Tump administration coupled with the prospect of lower taxes could stimulate the economy yet further.

The company also has a 19% exposure to European equities. Although the impact of QE on the eurozone should not be underestimated, the region appears to offer growth potential. It should help to boost dividend payments in future. And although the Witan Investment Trust currently yields 2%, its dividend growth rate could be relatively high in the long run.

The post 2 top-performing investment trusts for dividend investors appeared first on The Motley Fool UK.

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• As the Lloyds share price falls while profits rise, is it time to dump?
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Peter Stephens does not own shares in any of the companies 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.

The following three big names have been around for decades with a proven track record of success. All three are now numbered among the top five most traded investment trusts, according to Interactive Investor, and once you see how they’ve performed, you’ll understand why.

Scottish Mortgage Trust

And the winner is… Scottish Mortgage Trust (LSE: SMT). This £4.5bn mega trust, launched more than a century ago in 1909 when Edward VII was on the throne, has delivered stunning growth of 176% over the past five years, according to Trustnet.com. That’s three times the return on the iShares FTSE 100 exchange traded fund (ETF), which delivered 49% over the same timescale. Sometimes active management is worth paying for.

Not that Scottish Mortgage Trust is particularly expensive, with no initial fee and an ongoing charges figure (OCF) totalling just 0.51% a year (iShares FTSE 100 charges 0.07%). The trust invests in a global spread of equities, with 46% exposure to the booming US market. Top US holdings include Amazon, Tesla Motors and Facebook. It’s roughly 25% invested in Europe, including a stake in Ferrari, and 18% in China, where it holds Baidu and Alibaba. This top quartile fund trades at a premium of 2.3% to net asset value, but that’s the price you pay for success.

Witan Investment Trust

Scottish Mortgage Trust isn’t the only big beast out there. Witan Investment Trust (LSE: WTAN) was also launched in 1909 and now manages assets totalling nearly £1.6bn. Manager Andrew Bell has forced through a successful turnaround plan, adopting a multi-manager approach with 12 investment managers following six different mandates. The result: a whopping 120% return over five years.

Witan is 41% invested in the UK, with holdings such as the London Stock Exchange, spirits giant Diageo and, ahem, BT Group. It’s 25% invested in the US, 16% in Europe and the rest in international stocks. It’s slightly more expensive than Scottish Mortgage Trust, with a total expense ratio of 0.87% a year, but few will be complaining given recent performance, and it trades at a 4.63% discount. However, its UK focus could make it vulnerable to any Brexit slowdown.

Finsbury Growth & Income Trust

Finsbury Growth & Income Trust (LSE: FGT) is a relative minnow with £968m under management, and a parvenu upstart to boot, launched in 1926. While the first two trusts have a roaming international remit, Finsbury is 100% invested in UK stocks, and that has done it no harm at all, with a total blockbusting return of 116% over the past five years.

The fund is run by alpha manager Nick Train, the man behind the hugely popular CF Lindsell Train UK Equity fund (which is up 113% over five years). He has a proven track record in rising and falling markets. Top holdings include RELX, Diageo, Unilever, London Stock Exchange, Burberry and Schroders. Its OCF is 0.8% a year, the premium is 0.36%, yield is 2.02%. Again, it will take a hit if the UK market dips, but right now Train is on a roll.

The post 3 investment trusts thrashing the market appeared first on The Motley Fool UK.

More reading

• How has the Scottish Mortgage Investment Trust share price risen 57% in a year?
• Here’s how Britons can invest in SpaceX on the FTSE 100
• £7,500 invested in Scottish Mortgage shares 3 years ago is now worth…
• Investors are pouring cash into Scottish Mortgage Investment Trust. Is it all about SpaceX?
• £15,000 invested in red-hot Scottish Mortgage shares 1 month ago is now worth…

Harvey Jones has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon.com, Facebook, Tesla Inc, and Unilever. The Motley Fool UK has recommended Burberry and Diageo. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Cheap cards

Shares in greetings card purveyor Card Factory (LSE: CARD) are down 26% to 296p since September 2015, after a 7.5% fall on the day of a first-half trading update.

Total sales grew 4.8%, with like-for-like sales up 0.2%, and the company reported a net opening of 34 new stores and said it’s “confident of delivering another year of approximately 50 net new openings.” But this half’s growth represents a slowing compared to the first half last year, and when high-flying growth candidates start to slow a little, it’s almost inevitable that their shares will take a tumble.

There’s also a hit from the falling value of the pound, but against that we heard that Card Factory is “highly cash generative, driven by its strong operating margins, limited working capital absorption and relatively low capital expenditure requirements,” and there’ll be news of a surplus cash return when interim results are released in September.

Electronics rebound

TT Electronics (LSE: TTG) shares fell 28% from their 2016 peak in March to late June, after the maker of electronics components reported two years of falling earnings. But since then, they’ve picked up 18% to 144p, perhaps showing some confidence in the current analysts’ consensus of a return to growth this year with a 14% EPS boost on the cards.

First-half results lend credibility to that, with a 25% rise in pre-tax profit and a 21% boost to EPS (16% and 12% at constant exchange rates). Net debt rose from £56.1m to £70.7m, though that doesn’t seem a problem for a company with turnover of more than £500m per year. The interim dividend was maintained at 1.7p per share.

Chief executive Richard Tyson lauded the firm’s return to profitable growth, adding “we are confident of continued progress in 2016.” So are we looking at a bargain now? With a forecast dividend yield of over 4% and further EPS growth predicted for 2017, TT Electronics shares are looking good value to me.

An investment trust?

I’m a fan of investment trusts, and a 21% rise in the share price of Witan Investment Trust (LSE: WTAN) since February has grabbed my attention. Witan is a globally-diversified trust, so could it be a good contrarian time to buy?

First-half results show a 6.4% net asset value (NAV) return, and though that was a little below the firm’s benchmark of 7.7%, excluding changes in the value of debt lifts it to 7.5%. But what really attracts me is that the shares have fallen to a discount of 8.5% to NAV, which means they’re priced at 8.5% less than the market value of the trust’s underlying investments. Investment trust shares do tend to trade at discounts to NAV, but that looks a bit too wide to me — and Witan thinks so too, having been buying back its own shares while they’re lowly-valued.

Total interim dividends amount to 8.5p per share (up from 7.7p at the same stage last year), and though yields of only a little over 2% aren’t that exciting, we’re looking at a growth vehicle rather than an income target. Could be nice.

The post Are these 3 hidden bargains from today’s news? appeared first on The Motley Fool UK.

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Alan Oscroft 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.