I see a handful of 10% fallers Friday. I’ve picked three I think are unfairly depressed, and I’ve added them to my potential buy list.

Dividend champion

My fist pick is City of London Investment Group (LSE: CLIG), which is one of the best dividend payers out there. The investment manager handed over 27p per share last year for a yield of 6.7%, and that was just the ordinary dividend. There was a special dividend of 13.5p per share on top of that.

Analysts are forecasting an ordinary dividend of 29p this year. Now, the share price has plunged by 14% over the past week, meaning the 29p would produce a yield of 7.4%.

City of London does mainly specialise in emerging markets, and there might be fears that the coronavirus contagion could hurt those disproportionately. But I don’t see any clear predictions regarding likely demographics of the infection, and I think the price fall is overdone.

City of London its also moving to invest in developed markets and in real estate too, and I’m seeing a long-term income buy.

Property

Next up is property developer U and I Group (LSE: UAI), and I’m upbeat about its prospects as it keeps winning impressive new contracts.

Even before the coronavirus panic escalated, U and I was being hit by the property blues. The double whammy has pushed the shares down 13% on the day at the time of writing, and they’ve fallen 18% over the course of the week.

Perhaps there are worries that work at development projects might have to be halted due to quarantine fears. If that happens, U and I could suffer some impairments in the current year. But again, I really don’t expect to see any long-term hit to this kind of business.

I don’t think there’s much chance of a dividend cut, as the firm is in a phase of returning surplus capital. And the share price drop has pushed the forecast dividend yields up to 6.5% this year and 7.2% next.

Investment trust

My final pick is the Schroder UK Mid Cap Fund (LSE: SCP) investment trust. As its name suggests, it invests in mid cap stocks, together with small caps, and aims for a total return in excess of the FTSE All Share index.

I guess investors fear smaller companies are more likely to be damaged by any coronavirus fallout, and that’s presumably why they’re dumping this trust.

Since the market closed at the end of last week, we’re looking at a 19% price fall, so what’s that done to the valuation? Investment trust shares are typically priced in relation to the value of their underlying assets, and typically trade at a small discount to that (though they some sometimes reach a premium).

The trust’s current net asset value per share (NAV) stands at 660p, and that puts the shares on a 20% discount. The NAV might fall, but I think the sell-off is overdone.

The post 3 falling stocks I’d buy as the FTSE 100 crash continues appeared first on The Motley Fool UK.

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.

However, for long-term investors such periods of time can present buying opportunities. The track record of the stock market shows that there has been a recovery from all corrections and crashes. While this can take time, buying during an uncertain period can increase potential returns.

With that in mind, here are two investment trusts which could be worth buying right now. They could help an investor to gain access to a range of stocks, and benefit from the recent market downturn.

Improving outlook

Reporting on Friday was City of London Investment trust (LSE: CTY). It has enjoyed a relatively positive half year to 31 December, with its net asset value per share rising by 4.2% versus its level at 30 June. Its overall performance was slightly better than the UK equity income benchmark, although following the recent stock market correction, it is still down 2.1% during the last six months.

During the period, the company increased its exposure to oil and gas companies such as BP and Shell. This seems to be a sensible move, since both stocks offer relatively high dividend yields and are set to benefit from an increasing oil price. Furthermore, the company’s position in housebuilders was its larger sector contributor to relative performance during the period. With generally favourable conditions set to continue, housebuilders could deliver further growth.

With a dividend yield of 4.2%, City of London Investment Trust could be a worthwhile income holding over the medium term. Although it now trades at a premium of 2.5% to its net asset value, it continues to be well-run and could post relatively strong total returns in the long run.

UK focus

Also offering upside potential is the Schroder UK Mid Cap (LSE: SCP) investment trust. It has been able to outperform the UK all companies benchmark in the last year, with its returns being 14.3% versus 8.2% for the benchmark. However, it still trades at a discount to its net asset value, with the current discount being just under 15%. This suggests that there could be upside potential from its valuation alone.

Looking ahead, the prospects for UK-focused companies could be uncertain. Brexit talks continue and the UK is little over a year from leaving the EU, transition period aside. This could mean that some of the company’s major holdings may experience a period of volatility over the medium term.

While this may affect its performance somewhat, many UK-focused mid-caps may be undervalued at the present time, owing to the potential impact of Brexit. As such, now could be a good time to buy a range of them through the Schroder Mid Cap investment trust.

The post Looking to invest £1,000? Here are two investment trusts to consider appeared first on The Motley Fool UK.

However, one downside is that because it only holds the largest 100 stocks listed in the UK, its focus is very much on large-cap equities. While larger companies can offer more stability and less volatility than smaller firms, in general, they do not grow as quickly as mid- and small-cap equities. This is demonstrated in the performance figures of the FTSE 100 vs the FTSE 250. For example, the former has returned around 50% for the five years to the end of November. The FTSE 250 index, which contains the 250 largest stocks outside the FTSE 100, returned around 90%. That’s a huge difference. Therefore, an allocation to companies outside the FTSE 100 could be a sensible idea for investors seeking strong growth over the long term.

Mid-cap fund

One way to get exposure to such companies is through a fund such as the Schroders UK Mid Cap Fund (LSE: SCP). This fund can be bought and sold in the same way as a regular share through your broker. 

Launched in 2003, SCP’s objective is to invest in mid-cap equities with the aim of providing a total return in excess of the FTSE 250 index (ex investment trusts).

A glance at the portfolio’s performance track record reveals that it has achieved this objective. For the five-year period to end of October, the fund’s NAV returned 16.4% per year, comfortably beating the FTSE 250 ex investment trust return of 14.3%. Since inception, its track record is even better, returning 16.8% per year, vs 13.9% for the benchmark.

That’s a phenomenal long-term return. Financial experts often advise that shares as an asset class can be expected to return around 8%-10% over the long term. This fund has effectively doubled that over the last 14 years. Can you afford to be missing out on those types of impressive gains?

Holdings breakdown

So what stocks does the fund hold to generate that kind of return? Let’s take a look at the top 10 holdings:

Source: Schroders. Data as of 31/10

As you can see, SCP takes a unique approach to picking stocks. There’s little focus on popular household names and more of a spotlight on under-the-radar companies. It’s a strategy that works. FTSE 250 caterer SSP Group is up 70% this year. HomeServe has risen 25%. Dechra Pharmaceuticals has surged 50%. Fund managers Andy Brough and Jean Roche are clearly good at picking stocks.

The fund has a yield of 2.2% at present, with dividends being paid twice a year. Ongoing charges are a reasonable 0.95%. The discount to the NAV is currently around 17%. 

While we can’t predict what global markets will do in 2018, I believe having some exposure to mid-cap stocks is a sensible idea for growth investors. The Schroder UK Mid-Cap Fund looks to be an excellent investment vehicle for such exposure.

The post Why this fund could be a better investment than the FTSE 100 in 2018 appeared first on The Motley Fool UK.