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Investment trusts in focus

Roundtable: Investment trusts in focus

Citywire Wealth Manager, 30 March 2021

Gavin Lumsden: How did last year’s intense volatility impact investment trusts versus open-ended funds?

Ewan Lovett-Turner: It certainly was a tumultuous year and that was reflected in performance versus the open-ended fund world. It really does depend on what time period you look at though. If you look at the end of the year, then the performance stats continue to look very good versus open-ended, which matches the longer-term history…

Gavin Lumsden: A large part of the closed-ended fund universe is investing in non-equities, alternatives, property or debt, infrastructure, etc. How did those perform last year?

James Carthew: A lot of it depended on what your experience of Covid was, but to agree with what Ewan was just saying about the strengths of having a closed-end fund, in the debt sector, for example, having some diversified income is one of the topics we cover quite deeply.

They actually were gearing up when everybody else was panicking in the depths of March 2020, when things were really going awry, and buying stuff quite cheaply. Good-quality bonds were getting a discount to par value. That’s just one example, lots of the equity funds did the same sort of thing.

So that ability to buy stuff when everybody else was panicking really worked out quite well for a lot of people. In property, it really depended which bit of the market you were investing in.

So, if you were in the bit that was serving the e-commerce market, especially logistics funds, they did really well over the year and raised quite a lot of money, and powered ahead in terms of their NAVs. Any exposure to retail [however], you were in real trouble. So, discounts widened.

Student property funds also had problems because, obviously, the students weren’t able to occupy their rooms for large chunks of the period.

Elsewhere in the market, we had some more wobbles about power prices, but generally the renewable energy sector just carried on going and had quite a good year and we had plenty of other interesting specialist markets.

Things like the Hipgnosis and Round Hill Music funds did really well. So, it’s a real mixed bag, but on the whole a positive experience I think.

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