Investment Trusts: Put track records to the test
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WE ALL want to pick winners, but choosing a fund to invest in is not easy. Most investors look at past performances. These are no guide to future results, but they do allow you to compare investment trusts on a fair and meaningful basis. It is worth looking at how performance figures are calculated.
Investment trusts issue shares for investors to buy and sell. All shares have a bid and offer spread: the bid is the lower price at which you can sell the shares, while the offer is the higher price at which you buy. Most spreads are less than 1 per cent. It is standard practice for shares to be quoted on a mid-market basis - that is, the mid-point between bid and offer price. There is also a 0.5 per cent charge for stamp duty paid on all share purchases. Most performance figures, including those of the Association of Investment Trust Companies (AITC), are calculated on a mid-market basis, excluding costs.
The figures produced by the AITC are calculated on a total return basis, meaning that any income in the form of dividends is reinvested. So the figures take account of both capital and income. The tables show the top- performing funds in the most popular sectors over one and five years, and which sectors have performed best over the short, medium and long term. They assume a pounds 1,000 investment over the periods, with shares bought at the mid-market price at the beginning and any dividends used to buy more shares. They assume the total investment was realised at the mid- market share price at the end of March 1998.
When you have decided on a sector, compare performance of the trusts within it. Look for good, consistent performance over different time periods. Remember that funds investing overseas have been affected by the recent strength of sterling and the poor performance of certain markets, such as the Far East and emerging markets. Movements in currencies and markets, however, are cyclical: those out of favour now can be excellent buying opportunities.
q Annabel Brodie-Smith works for the Association of Investment Trust Companies.
Investment trust performance tables
All values show the return of pounds 1,000 original investment with all net dividends reinvested
International General
1 Year
Personal Assets 1451.40
Baring Tribune 1403.90
Majedie 1403.60
Law Debenture Corp 1379.90
Witan 1357.80
Scottish Mortgage 1343.70
International Income Growth
1 Year
British Assets 1361.90
Fleming Worldwide Inc 1296.90
Securities Trust of Scotland 1271.30
British Assets 1243.20
Murray International 1127.00
International Capital Growth
1 Year
British Assets Growth 1482.40
Jupiter Primadona 1459.80
Warrants and Value 1398.10
Anglo & Overseas 1365.90
RIT Capital Partners 1357.90
British Empire Securities 1356.10
UK General
1 Year
Fleming Claverhouse 1582.70
Mercury Keystone 1491.80
Foreign & Colonial Spec Utils 1454.40
Edinburgh Investment 1412.40
Albany 1408.90
Murray Split Capital 1385.00
UK Capital Growth
1 Year
Fleming Enterprise 1444.20
Legal & General Recovery 1377.10
River & Merc First UK 1371.90
Schroder UK Growth 1340.10
Fidelity Special Values 1324.50
Broadgate 1317.10
UK Income Growth
1 Year
Temple Bar 1570.80
Merchants 1546.00
City of London 1477.30
Dunedin Income Growth 1466.80
Perpetual Income & Growth 1465.20
Investors Capital 1451.40
The best-performing sectors
1 Year
High Income 1443
UK Income Growth 1414
UK General 1395
Europe 1383
Property 1354
5 Year
Personal Assets 2671.40
Law Debenture Corp 2472.30
Majedie 2305.90
Baring Tribune 2292.70
Scottish Mortgage 2280.60
Witan 2241.00
5 Year
British Assets 2324.80
Murray International 1916.20
Securities Trust of Scot 1875.50
British Assets 1576.60
5 Year
Jupiter Primadona 4435.00
RIT Capital Partners 2906.90
British Empire Securities 2458.80
Henderson Electric & Gen 2456.50
TR Technology 2271.50
Anglo & Overseas 2263.90
5 Year
Finsbury Trust 3435.20
Mercury Keystone 3130.20
Fleming Claverhouse 2715.10
Finsbury Growth 2583.60
Edinburgh UK Tracker 2245.50
Edinburgh Investment 2205.60
5 Year
Fleming Enterprise 2261.20
Broadgate 1712.70
Broadgate 1689.30
Kleinwort Endowment 1610.30
5 Year
City of London 2392.70
Temple Bar 2323.20
Merchants 2147.20
Value and Income 2115.70
Dunedin Income Growth 2072.00
Murray Income 2063.50
5 Year
Europe 2723
Property 2540
UK General 2293
UK Income growth 2217
Venture & Development Capital 2217
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