They are not limited to just stocks and shares. Trusts can buy a range of different assets. Today, investors can acquire trusts that own everything from plane leases to energy storage facilities. 

Indeed, the flexibility of these investment vehicles is the primary reason I think they can be the best way to invest in the stock market. And there is one investment trust that looks incredibly attractive to me right now. 

The investment trust approach 

The Herald Investment Trust (LSE: HRI) is an uncovered gem, in my opinion. It specialises in technology stocks.

Its overriding aim is to generate capital growth by investing in a technology and telecom equities portfolio. And it has achieved this goal over the past five years returning more than 100% over this period, outperforming its benchmark.

Unfortunately, as investors have moved away from high-flying tech stocks over the past couple of months, the trust’s performance has deteriorated. Over the past three months, shares in Herald have lost 22%.

However, I think this could present an opportunity to snap up some shares in this investment trust, which has a strong track record of creating value for shareholders at a discount. 

The firm’s top holdings give some idea of the approach the company’s managers are using to invest in the market. At the end of 2021, the star holding was GB Group, a leader in identity data intelligence. The trust initially paid £3m for its stake in the enterprise several years ago. At the end of 2021, the holding was worth £48m. 

GB Group helps governments and companies fight cybercrime, lower the cost of compliance and improve the customer digital onboarding experience. Demand for these services is only likely to increase as the world becomes more digitised. And it is a great example of Herald’s desire to seek out growth stocks with an edge. 

Finding an edge 

Unfortunately, this process does have some risks. Notably, investing in growth stocks is always going to be challenging. Therefore, despite the investment trust’s track record, there is no guarantee it will be able to find the next GB. Neither is there any guarantee that its existing holdings will continue to outperform. 

As well as these issues, the trust also charges a management fee of more than 1%. This could eat into investor returns. 

Despite these challenges and risks, I would invest £500 in this investment trust today. I think it offers a unique package of exposure to the tech industry and fast-growing smaller companies. As the global tech sector continues to expand, I believe the trust is one of the best ways to invest in tomorrow’s firms via an experienced investment management team. 

The post An investment trust I’d buy with £500 today appeared first on The Motley Fool UK.

Ice cool

The two investments I’m looking at here are somewhat different to a cash ISA. They spread your money across a range of UK and global stocks in the red hot technology sector, making them high-risk, high-return vehicles.

The first, Polar Capital Technology Trust (LSE: PCT) invests in a portfolio of global technology companies and is big enough to be quoted on the FTSE 250 index. It was launched in December 1996, just as the dotcom boom was picking up speed, and survived the bust in 2000.

Capital idea

Today it announced its results for the six months to 31 October which showed an 8.5% rise in total net to £1.68bn, with the share price up 7% in the period, adjusted for sterling. The weak pound worked in its favour here because in local currency terms it was down 0.7%, although it still beat the FTSE World index over this turbulent period, which fell 3%.

However, Polar Capital Technology Trust has a good long-term track record and will suit those who still believe in the big US and Chinese tech giants, as its top 10 holdings include Google-owner Alphabet, Apple, Microsoft, Facebook, Alibaba and Tencent, a roll call of the big names in technology. The fund has grown a whopping 149% over five years, against 5% for the FTSE 100. My worry is that the US tech surge could be drawing to a close, and the trust is down 11% in the last six months. Nothing lasts forever.

I am therefore wary despite a low annual charge of 1% and discount of 6.45%. There is no dividend. This could be a case of right fund, wrong time. Unless I’m wrong and the technology bull run has further to go.

British tech

Herald Investment Trust (LSE: HRI) invests in quoted small and mid-cap technology, communications and media companies and has a great track record since launch in 1994, turning an initial £1,000 investment into £14,000.

With so many technology funds focusing on the US it is a novelty to see this one has 52% exposure to the UK, with only 24% in the States plus a smattering in Asia-Pacific and international equities. It has an annual charge of 1% but again, no dividend.

Hark the Herald IT

Herald has underperformed US tech-focused trusts as a result, although a return of 62% over five years looks good against just 27% on the FTSE All Share. Its top holdings are less familiar than Polar’s, with names such as GB Group, Diploma and Craneware, although you may know Boingo Wireless, IQE and M&C Saatchi.

The trust has total assets of £927m and currently trades at a massive discount of 19% to net asset value, which suggests to me investors are wary of this sector at the moment. This trust is at the riskier end and you also have to factor in Brexit, I suppose. It could do well if the UK bounces back next year, though.

The post Forget a cash ISA! I reckon these 2 investment trusts will work your money much harder appeared first on The Motley Fool UK.

Investment trusts are a great option. The best thing about these companies is that they usually have a long history of generating returns for shareholders, which gives potential investors plenty of data to analyse and make an informed decision.

The Herald Investment Trust (LSE: HRI) is a great example. This firm has been operating since 1994, and over this period its net asset value has grown by 1,229%, enough to turn an initial investment of £1,000 into £14,000. This record of value creation makes the trust a perfect investment for the beginner investor.

Global diversification 

Herald invests its cash for investors across the world. At the end of 2017, around half of its assets were invested in growth opportunities in Asia with the other half spread between Europe and North America. Such broad diversification is difficult for the average investor to accomplish, but has numerous benefits. 

Indeed, by investing its assets across the world, Herald’s returns are not going to be held back by the poor performance of just one region. As the European economy has struggled over the past few years, the company has profited from its exposure to fast-growing Asian regions.

Herald’s performance record and global exposure make it the perfect pick for beginner investors although the one downside of the trust is its relatively high cost with an annual ongoing charge of 1.09% per annum. Still, considering its global diversification I believe that this is a price worth paying. Management is also returning cash to investors by way of a share buyback in an attempt to narrow the 13% discount to net asset value the shares are currently trading at.

Protecting your money 

Another investment trust that has a multi-decade record of generating outperformance for investors is RIT Capital Partners (LSE: RCP). 

Since its founding in 1988, the trust has produced an annual return of 12.9%, turning an initial £1,000 investment into just over £38,000. Unfortunately, this performance has come at a cost. The annual charges for this fund are 1.2%, although it does also support a dividend yield of 1.7%, unlike Herald.

RIT’s key goal is capital preservation and it does this by investing across a broad range of assets via a broad array of funds and high-quality equities. The firm also invests in private equity businesses, which produce returns uncorrelated to equity markets, this means it has a degree of insulation from wild market swings. In total, single stocks account for around 10% of its portfolio with the remainder made up of hedge funds and other investment funds, giving it exposure to equities all over the world and a broad selection of financial instruments and assets. 

There’s also a small portion of the portfolio devoted to property, gold and fixed income securities. It would be virtually impossible for the average investor to build a portfolio of this size and diversification, which is why I believe RIT could be an invaluable addition to any portfolio. Even though the trust is expensive, its returns and diversification more than make up for the extra cost incurred.

The post The best place to invest your first £1,000? Consider these two investment trusts appeared first on The Motley Fool UK.