But while shares have beaten other forms of investment hands down for more than a century, a lot of people are wary of picking their own and don’t like the perceived risks. That’s why so many opt for pooled investments, but what’s the best kind?

For me, I don’t want to hand over my cash for someone else to manage and take their commission (and put the interests of their shareholders first, not me). 

Capital growth

I think an ideal solution is to buy shares in investment trusts, which makes you the shareholder and the recipient of all that lovely commission. Speaking of which, I’ve been impressed by the performance of Pantheon International (LSE: PIN), which released an August performance update on Wednesday.

Pantheon shares have more than doubled in value over the past five years, while the FTSE 100 has managed a measly 2% gain. 

Pantheon, which invests in various other funds including private equity funds, reported a 4.4% rise in net asset value (NAV) over the month, keeping its recent month-by-month rises going nicely. And with a stated NAV of 2,572p per share, and the shares priced at 2,160p after a 3% rise in morning trading, we’re looking at a discount of 16% at the moment. While investment trusts typically do trade at a discount to NAV, 16% looks attractive to me.

Pantheon also generated £14.8m in net cash during the month, and completed five new investments for a total of £29.6m in such fields as healthcare, engineering and biotechnology. So it looks pretty well diversified to me.

Pantheon aims at capital growth, and pension investors will probably be looking for income investments too.

Income

That brings me to North American Income Trust (LSE: NAIT) which has been paying progressive dividends of around 3-4%.

The share price has also done pretty well, with a 65% gain over five years for an impressive total return. As its name suggests, the trust targets its cash mainly at American S&P 500 stocks, so that should provide some clear international, and hopefully Brexit-proof, diversity too.

In its first half, reported Wednesday, the trust saw its NAV per share grow by 7.2%, in sterling terms. And over the past three years, the cumulative NAV return came to 85.6% (against the S&P 500’s 69.5%).

The dividend which, conveniently for income seekers, is paid quarterly, saw a first-half boost of 6.7%, and that’s keeping nicely ahead of UK inflation.

The North American portfolio is currently 93%-invested in equities, covering 41 individual holdings (with a small amount invested in 11 corporate bonds). That looks well diversified to me, and it would be tough for most private investors to emulate that kind of spread.

These two investment trusts look to me like a nice pair for a retirement portfolio.

The post 2 top investment trusts that could help you beat the State Pension appeared first on The Motley Fool UK.

Investment trusts provide the perfect solution to this dilemma, in that a trust’s investors and shareholders are one and the same. Initial capital is provided at IPO time, and the only way to invest is to buy shares.

Global equity

I’ve been examining Pantheon International (LSE: PIN), which released first-half figures today. Pantheon is a little unusual in that it invests in private equity funds with a global reach, which makes it something of a fund-of-funds vehicle.

I’d usually shun such beasts with their dual layers of management costs, but I quite like Pantheon for several reasons. As an investment trust it avoids that top-level conflict of interest, and it gives small investors access to private equity, from which they would otherwise be excluded. But the thing I most like is its impressive performance. 

The period saw a net outflow of cash (including distributions) of £137m from the company’s portfolio, and net assets fell to £1,217m from £1,388m. But there were £196m in new investment commitments made in the six months, and on a per-share basis I think things look good.

Net asset value (NAV) per share, a key measure for investment trusts, rose by 2.5% from 2,189p to 2,245p. The share price did grow ahead of that over the same period, by 4.2% from 1,793p to 1,869p, and that narrowed the discount — but it still stood at 16.8%, which looks attractive to me.

The share price has doubled in five years, to 1,860p at the time of writing, while the FTSE All-Share index has gained just 20%, so we’re looking at an outperformer here.

50-year champion

Alliance Trust (LSE: ATST) also has a global outlook, but with a more conventional approach of investing in large international companies rather than private equity. And it’s been a byword for long-term performance for decades.

Alliance Trust has lifted its annual dividend for 50 consecutive years, a record that few can match. Yields have been relatively low at around 2%, but investors have enjoyed solid share price growth too. This time we’re looking at 71% over five years, which again trounces the FTSE All-Share, and an outperformance that stretches back further.

At the halfway stage at 30 June 2017, NAV per share stood at 742.2p with the shares at 700p, representing a 5.7% discount. That’s narrow by investment trust standards and suggests that investors see little risk in Alliance Trust, compared to the smaller and riskier Pantheon with its discount close to 17%, though it has also been affected by Alliance’s share buyback programme.

Attractive returns

First-half total shareholder returns came in at 10.8%, with the firm’s equity portfolio beating its benchmark by 4.2%. That comes at a time of transition to a new investment approach, which essentially consists of adopting a multi-manager approach.

That can result in higher charges, but the transition was apparently at a much lower cost than originally anticipated, and the company is targeting charges of no more than 0.65%.

How well this new approach continues to beat the indices remains to be seen, but right now I’m seeing another long-term buy.

The post Got £1,000 to invest? These 2 soaring investment trusts could help make you wealthy appeared first on The Motley Fool UK.

Over the past five years, the fund, which invests in private equity assets around the world, has produced a return for investors of 134% for investors excluding dividends, outperforming the FTSE 100 by 110%.

And unlike other shares, which are generally volatile, Pantheon has produced these returns with little volatility; the shares have marched steadily higher over the past 10 years despite the wider market turbulence.

Underlying asset value growth 

Today the private equity manager reported yet another healthy increase in the underlying asset value of its portfolio. Pantheon’s net asset value per share at the end of August hit 2,303p, an increase of 131p, or 6% from the NAV reported at the end of July.

The fund manager’s portfolio generated net cash of £22.5m during the month and completed six new investments amounting to £38m. This included a £13.7m secondary investment in a portfolio of five energy and transport assets, and an £11.4m secondary investment in an educational business with an established footprint in Europe, Latin America and Africa.

Other investments included a £3.1m allocation alongside BC Partners in PetSmart, a specialty pet retailer with over 1,500 stores in North America.

Time to buy? 

Pantheon has been able to generate such steady returns for investors over the years because the firm invests in private assets, which are not correlated with the stock market. These are growing businesses with a huge runway for expansion ahead of them allowing Pantheon and its investors to reap enormous rewards. 

Since inception, the firm has grown its net asset value at a rate of 11.9% per annum.  However, at the time of writing the shares are trading at a discount of 28% to the NAV per share. As long as the company can continue to grow its asset value at a double-digit rate every year, I believe this is a very attractive investment opportunity for investors. 

Cash cow

Electra Private Equity (LSE: ELTA) operates a similar business model to Pantheon and has produced similar returns for investors over the past decade. For the 10 years to March 31, Electra has grown its NAV by 230% and seen its shares rise by 237% with an annualised return on equity of 13% over the decade. Earlier this year the investment trust decided to return £1bn to investors via a special dividend after a decade of steady returns.

Over the long term, Electra’s management is targeting annualised NAV growth of between 10% and 15%, which is clearly a comfortable range based on the performance of the past 10 years. 

I believe that the firm can continue to churn out these impressive returns as the business is currently managed by Edward Bramson, whose Sherborne Investors investment vehicle is the biggest shareholder in Electra. Sherborne fought a long and bitter campaign to get Bramson on Electra’s board as part of a plan to overhaul the private equity firm. Sherborne’s team believes there’s more value to be unlocked from Electra’s portfolio, implying that the trust will see further growth in its NAV during the years ahead. 

The post Can these top-performing funds help you to achieve financial independence? appeared first on The Motley Fool UK.

Over the long run, a low-cost FTSE 100 tracker or a diversified portfolio of individual stocks stands a good chance of exceeding the first of these growth rates by perhaps 1% a year, while some of the big-name growth- and small-cap investment trusts have achieved the second. But the third? Annual mid-teens historical returns are generally confined to risky and volatile microcaps — too risky for retirement money for some — and to funds investing in specialised sectors and strategies. They’re niche products so you shouldn’t be overexposed to any one of them, but as part of a portfolio that includes some household name investment trusts, they could play a vital role in ensuring your retirement is more comfortable — and arrives sooner — than a boring tracker could achieve.

Courting success

Burford Capital (LSE: BUR) is the world’s leading litigation funder, backing corporates in commercial and intellectual property disputes and enforcing judgements for a share of the awards. It has returned a spectacular 484.8% in the past five years, a figure unlikely to be repeated as the business is now mature. Nevertheless, an average annual return of 20-25% could be within reach. Profits are dependent on judicial decisions and exchange rates (most cases being in the US), so volatility may be high, making this a choice for investors with long time horizons.

Healthy returns

International Biotechnology Trust (LSE: IBT) has achieved the highest five-year return in the hot biotech sector, at 221%. With rich countries facing ageing populations and major medical breakthroughs increasingly achieved through technology, I believe IBT’s mix of medics, scientists and financiers are well placed to continue generating 25-30% a year from a global mix of listed and unquoted investments. The trust recently introduced a 4% annual dividend — great for retirees, but those not yet in drawdown should reinvest it.

Private pleasures

Private equity-owned businesses generally outperform listed ones. But, as the name suggests, the asset class is seldom available to the public. A few listed private equity trusts represent the exceptions, Pantheon International (LSE: PIN) being the UK’s longest-established and, in my view, best. Returning 168.3% over five years, it’s hugely diversified, by fund manager, stage, scale and geography, so the 11.8% annual NAV return achieved since inception, which includes a big hit following the global financial crisis, could be beaten. Second biggest holding in my SIPP.

Stellar strategy

A handful of fund managers aim to achieve private equity-like returns by investing in small firms where they believe they can exert influence on management to execute strategic change. The shining star among these is Strategic Equity Capital (LSE: SEC), which has generated a 177.2% return for investors over five years. Its share price fell slightly in 2016 because it moved from trading at a premium over Net Asset Value to a discount, as the small-cap IT sector fell out of favour. This makes it a smart buy now, raising the probability of achieving 12-15% a year growth going forward.

The post 4 under-rated funds to supercharge your pension growth appeared first on The Motley Fool UK.