With the new tax year underway, the Association of Investment Companies surveyed advisers on their top choice of investment trusts for pensions and retirement income.
Among those trusts recommended for building up a pension was Worldwide Healthcare Trust.
Philippa Maffioli, senior investment manager of Blyth-Richmond Investment Managers, said: “This global trust gives investors the opportunity to gain exposure to pharmaceutical, biotechnology and other related healthcare companies all within an actively managed portfolio. These range from large multinational pharmaceuticals to unquoted emerging biotechnology companies.
“The team is actively looking at nearly 1,000 companies and works to identify sources of outperformance as well as those with underappreciated products in the pipeline with high quality management teams and strong financial resources.”
For Neil Mumford, chartered financial planner of Milestone Wealth Management, investors seeking growth should also consider JP Morgan Global Growth and Income Trust.
“This is one of the few investment trusts to be trading at a premium but this should not concern long-term investors,” says Mumford. “It places a high emphasis on the world’s largest stock market, the US, accounting for two-thirds of the portfolio. It is a high conviction portfolio with 50 to 90 holdings, with the top ten making up more than 40% of the portfolio.
This has allowed it to outperform by some margin with a 305% return over the last ten years. There will be times when there may be swings in the portfolio value but for the patient investor, this will hopefully pay off.”
Meanwhile, Doug Brodie, CEO of Chancery Lane, said investors should take note of trusts like Lowland, Murray International and City of London, which have all outperformed the FTSE All Share over the last 20 years.
Brodie explained: “Investment trusts may not have the sales and marketing budgets of pension companies so investors have to look a bit harder. A quick look at the long-term returns will show folk there’s a good reason that institutional investors are big investors in trusts.”
For investors in the decumulation phase, advisers recommended a number of investment trusts, including The Scottish American Investment Company.
Mumford described it as a “truly diversified equity portfolio”, spread equally between the US and Europe. While it doesn’t have the highest yield at 2.9%, Mumford said it has increased its dividend payouts by an average of 4.2% a year over the past five years and this increase has not hampered its ability to grow capital.
“The price is currently a complete bargain when you consider that it is trading at an extremely attractive discount to net assets of around 10% when historically it has been trading at near NAV or at a premium,” Mumford added.
