My tip would be to start investing tax-free through a Stocks and Shares ISA allowance. While stock markets can be volatile in the short term, I’d tip equities to beat almost every other form of investment in the longer run, making them the ideal way to build retirement wealth.

Investment trusts are an underrated way to tap into this growth, as they regularly outperform rival fund types. These two global trusts could help you towards a target of doubling the income you get from the State Pension.

F&C Investment Trust

F&C Investment Trust (LSE: FCIT) invests in a spread of global stocks, giving you an instant, internationally-diversified portfolio of publicly-listed equities, unlisted stocks and private equity. Launched in 1868, this is the world’s first collective investment vehicle with a tremendous pedigree.

Despite its long history, the £4.5bn fund remains sprightly today, its share price rising a bumper 99% in the last five years, easily beating its benchmark FTSE All-World index.

It gives you exposure to a spread of globally-renowned stocks, including US tech giants Amazon, Microsoft, Google-owner Alphabet, Facebook and Apple, as well as Visa, MasterCard, BP, Unilever and AstraZeneca. In total, it holds 450 companies, giving you a cushion if some of them underperform.

F&C currently yields around 1.5% but has a proud record of increasing its dividend payout ahead of inflation, boosting its value in real terms.

I’ve been an investment journalist for around 25 years, and F&C has been there throughout, doing what it does best… making investors richer. I reckon it should continue to do that over the next 25 years, taking you into retirement and beyond.

JP Morgan Emerging Markets Investment Trust

You could supplement it with a fund that zones in on the faster growth opportunities available from emerging markets. JP Morgan Emerging Markets Investment Trust (LSE: JMG) has also thumped its benchmark index, its share price climbing 91% over the last five years. If you had invested £10,000 in this 10 years ago, you’d have £24,145 today.

The trust contains big-name emerging market companies such as Taiwan Semiconductor, Chinese giants Tencent and Alibaba, and Tata Consultancy Services, giving you exposure to companies you might probably never buy as individual stocks.

A third of the fund is invested in China, which makes recent performance even more impressive, given the trade war with the US. It also gives you exposure to India, Taiwan, South Africa, Brazil and other emerging stars. The current yield is 1.32% but, again, you can expect dividend payouts to steadily increase over the years.

Whatever your age, these two trusts could help you build a passive income in retirement to supplement the State Pension, which isn’t enough on its own.

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JPMorgan Emerging Markets Investment Trust (LSE: JMG) is a good example. Over the past five years, its share price has performed more than twice as well as the FTSE 100, though for the first three years it was lagging the index. And looking back as far as 2002, the investment trust has wiped the floor with the Footsie, despite some erratic spells.

The trust released first-half figures on Wednesday, and it’s been another good period for emerging markets as the benchmark MSCI Emerging Markets Index is up 11.3% in sterling terms. JPMorgan Emerging Markets pretty much tracked that with a return on net assets of +11.2%, though the return on the shares was an even better 12% due to a narrowing of the discount.

Volatility

That highlights one reason for volatility from a trust like this when compared to the underlying benchmark. When the benchmark is doing well, more investors are attracted to the trust’s shares and the price rises ahead of it — and the discount to net asset value falls. 

Similarly, if emerging markets have a bad spell, I’d expect more investors to sell, emerging markets investment trust discounts to widen, and the shares to underperform a falling market.

Assuming a long-term rising stock market (and I see no reason for emerging stock markets to not follow the same long-term upward trajectory as our familiar FTSE indices), I’d expect a strong performance. And JPMorgan Emerging Markets has actually outperformed its benchmark index over one, three, five and 10-year periods to 31 December 2017.

Chairman Sarah Arkle pointed to a “strong entrepreneurial spirit in China and other emerging economies” as one indicator that such markets will “remain fertile territory for equity investment“. I agree.

Track record

Templeton Emerging Markets Investment Trust (LSE: TEM), which has been investing in emerging markets for decades, provides an even starker example of the volatility you can expect.

For most of the past five years, its shares were badly behind the FTSE 100, falling by more than 40% by the beginning of 2016. But since then, they’ve put on a strong growth spurt to realign with the Footsie. Going back to 1995, we’ve seen a 600% rise in the trust while London’s top index has just about doubled.

If you feel that emerging markets means small upstart companies that may or may not come good, or companies trading in dodgy-looking economies, Templeton Emerging Markets is one that illustrates how wrong that can be. The biggest countries it invests in are China/Hong Kong, South Korea, and Taiwan — all with that same entrepreneurial spirit and with track records of economic growth.

One of the trust’s biggest holdings is Samsung Electronics, and ’emerging markets’ companies don’t come much more internationally successful than Samsung. Brilliance China Automotive Holdings is another big constituent of its portfolio. It has a tie-up with BMW through a joint venture to manufacture and distributes BMW cars in China. 

The trust even holds Unilever shares. A lot of investors might not realise that Unilever does far more of its business in Asia and other developing regions than it does here in the UK.

Templeton Emerging also invests in upcoming technology firms, which I think gives it an attractive mix.

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JPMorgan Chinese Investment Trust

With a population of a staggering 1.4bn people, China is expected to surpass the United States to become the world’s largest economy in the near future. Urbanisation across the Asian powerhouse has resulted in impressive economic growth in recent decades. However, with around 44% of the population still living a rural lifestyle, it’s likely that there’s significant growth to come.

As China transitions from a capital expenditure-led economy to a consumer-led one, the wealth of the Chinese middle class is increasing rapidly. This should result in an abundance of investment opportunities across sectors such technology, leisure, travel and healthcare. Can UK investors capitalise on this exciting growth story? Absolutely.

One easy way to get exposure to the country is through the JPMorgan Chinese Investment Trust (LSE: JMC). Listed on the London Stock Exchange, you can buy this trust through regular brokerage platforms such as Hargreaves Lansdown. Its ongoing charge is 1.4%.

JMC aims to provide investors with long-term capital growth by investing in companies associated with Greater China. The portfolio holds between 45-65 stocks, including names such as Alibaba, Tencent Holdings and Bank of China. It’s currently overweight in the consumer, technology and healthcare sectors. 

The trust has performed spectacularly well over the last year, returning over 50%. Of course, after such a strong run, it would not surprise me if Chinese stocks experienced a correction. However, over the long term, I believe the potential here is massive. As such, this could be an excellent addition to a diversified growth portfolio. 

JPMorgan Emerging Markets Investment Trust

For those looking to spread their capital over several different regions in the pursuit of powerful growth, the JPMorgan Emerging Markets Investment Trust (LSE: JMG) could be a good option. Like the Chinese trust, it can be purchased very easily through a regular broker under ticker JMG. Ongoing charges are 1.3%.

While JMG has a near-20% exposure to China, it also has significant exposure to fast-growing economies such as India, Brazil and Taiwan. Key stocks in the portfolio currently include Tencent Holdings, Alibaba and AIA Group.

Emerging markets’ growth has been sluggish in recent years, however, momentum appears to be picking up again. As a result, the trust has returned almost 30% over the past year.

It’s worth remembering that emerging market regions can be volatile. Therefore, these kinds of investments may not be suited to risk-averse investors. However, for those comfortable with volatility, I believe both trusts offer exciting long-term potential. If you don’t invest now, you may look back in a decade’s time, and regret it. 

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