One option is to invest in an investment trust. These can be bought and sold through your broker just like regular stocks, yet unlike regular stocks, investment trusts give you access to a whole portfolio of companies, managed by a professional portfolio manager. The advantage is that you can increase your diversification and lower your investment risk. 

Here’s a look at two growth-focused trusts that have performed exceptionally well in recent years. 

JP Morgan Mid Cap Investment Trust 

The JP Morgan Mid Cap Investment Trust (LSE: JMF) invests in medium-sized UK companies predominantly within the FTSE 250 index. The trust aims to achieve capital growth for investors, by putting it’s money in under-researched dynamic companies with strong growth potential and reliable income streams. The portfolio managers have the ability to use borrowing to leverage the portfolio in an attempt to generate higher returns.

An analysis of the portfolio reveals a number of stocks I’m quite bullish about. For example, Ashtead Group, JD Sports Fashion and OneSavings Bank, three stocks in the top five holdings, are all companies that I rate highly for their growth prospects.   

The performance of this trust over the last five years has been outstanding, with the share price returning 144% to the end of February. In contrast, the FTSE 250 index returned 64%. With an ongoing charge of just 0.86%, I believe this trust is a fantastic choice for growth investors with slightly higher risk tolerances. It currently trades with a 3% discount to its net asset value (NAV). 

Schroder UK Mid Cap Fund 

Another growth-focused investment trust that I rate highly is the Schroder UK Mid Cap Fund (LSE: SCP). This trust also invests in mid-cap equities with the aim of generating a total return in excess of the FTSE 250 (ex-Investment Companies) index. 

Over the last five years to the end of February, the trust has easily achieved that objective, with the share price returning an impressive 11.6% per year vs 10.4% for the benchmark. Since inception, SCP has delivered even higher returns for investors, generating total returns of 16.7% per year. Ongoing charges are just 0.93% per year. 

The portfolio manager of this trust has a unique investment process, taking a stock-specific approach with a focus on growth companies with strong management teams, good future prospects and strong business franchises. A look at the portfolio reveals some exciting growth stocks such as food and beverage concessions specialist SSP Group, veterinary pharmaceuticals group Dechra Pharmaceuticals and UK property website Rightmove. 

Given that the trust currently trades on a sizeable discount of 15% to its NAV, I believe now could be good time to take a closer look. 

The post Opened a stocks & shares ISA? Consider these high-growth investment trusts appeared first on The Motley Fool UK.

In America we Trust

The North American Income Trust (LSE: NAIT) is a venerable investment trust with a long history, having launched way back in 1902. Recent performance has been strong, according to Trustnet.com, with a return of 96% over the past five years, against an average of 66% across its benchmark North America sector. However, the last six months have been tougher on the US as the Trump rally loses steam.

Today the trust has published its half yearly report to 31 July, and it reflects this slowdown. The company’s net asset value per share rose just 0.6%, slightly ahead of the Russell 1000 Value index return of 0.5% but behind the S&P 500 index return of 4.5%.

Income dream

This still looks a tempting US income play to me, especially given a progressive dividend stance from the board. Buoyed by a 15% rise in revenue per ordinary share it declared a second quarterly dividend of 7.5p per share, taking total first-half dividends to 15p. That is a rise of a 7.1% following last year’s 9.1%. Currently, the trust yields 3.1% against 2.4% and 2% on the Russell 1000 Value and S&P 500 respectively. 

North American Income Trust invests in a concentrated portfolio of just 45 equities and eight corporate bonds. It has a high strike rate with approximately half of its equity holdings raising their dividends over the past six months, by an average of 8%. Chairman James Ferguson reckons US corporate fundamentals continue to improve steadily and income stocks are due a revival: “Many cash generative companies which pay dividends have been out of favour but this sector is becoming more attractive because the risk of higher interest rates has been discounted.” This £409m fund has the added attraction of trading at a discount of 9.61%. 

Mid-cap marvel

Another overlooked investment trust that has outpaced its sector, JP Morgan Mid Cap (LSE: JMF), published its final results last Friday, and I feel like calling it to your attention. It invests in medium-sized UK companies listed on the FTSE 250 Index and has returned a stonking 178% over the last five years, more than double the 78% return on its benchmark UK All Companies index. 

The fund reported a 30.4% total return on net assets against 21.5% on its benchmark, despite Brexit uncertainty, which hit FTSE 250 companies relatively hard. The trust achieved this by reducing exposure to companies focused on the hard-pressed UK consumer and shifting into more resilient sectors. Management team Georgina Brittain and Katena Patel, both appointed in the last five years, deserve their glory.

Living it large

The fund acknowledges that UK mid-caps have suffered from Brexit fears but says these are over-pessimistic with UK companies well placed to take advantage of new opportunities in faster growing countries outside the eurozone. Mid-caps have thrashed large-caps lately and if you think this will continue, this trust is a good way to join in the fun.

The post 2 sector-thrashing investment trusts that could make you a millionaire appeared first on The Motley Fool UK.