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Best performing Investment Co sector in 2019 and 4 IT picks for 2020

12 December 2019

Technology and media was the best performing investment company sector over the past year, according to figures from the Association of Investment Companies, with the sector producing a return of 34% in the 12 months to 30 November, compared to the average investment company return of 14%.

Growing interest in sustainable investment saw the environmental sector deliver the second-highest return of the year of 30%. Despite political uncertainty around Brexit, the UK sectors closely followed, with UK All Companies and UK Smaller Companies delivering returns of 27% and 26% respectively.

Annabel Brodie-Smith, communications director, the AIC, said: “Political uncertainty, trade wars and worries about an economic slowdown have been on investors’ minds all year. So it’s good to see the average investment company delivering a healthy 14% return.

“Although it’s always interesting to look back at the best performing companies at the end of the year, it’s important to remember that investing should be for the long term and past performance is not an indicator of future returns.”

The AIC said the top 10 best-performing investment companies among its members spanned several sectors, but companies in the UK Smaller Companies sector featured most heavily, accounting for four out of the ten.

BlackRock Throgmorton Trust was the best-performing member company over the year, producing a 49% share price total return from 1 January to 30 November. It was closely followed by UIL in the Flexible Investment sector, up 48%, and JPMorgan Russian Securities, up 47% over the same period.

Four picks for 2020 

Looking to the year ahead, AJ Bell has picked four investment trusts it says investors could consider for their portfolios.

For cautious investors, the company said The Personal Assets Trust could make for an “interesting first holding” with preservation of capital at the forefront of its thinking. Managed by Troy’s Sebastian Lyon, it includes high quality equities such as Microsoft, Nestle, Unilever, short dated government bonds, cash and gold.

For a more balanced investment trust, AJ Bell lists Temple Bar, managed by Alistair Mundy of Investec and taking a contrarian approach, focusing on companies that are out of favour.

Ryan Hughes, head of active portfolios, AJ Bell, said: “Balanced investors have been well rewarded this year with equities doing well but the UK has been a laggard given concerns over Brexit and slowing growth. As the end of the year approaches, we may be moving closer to a resolution and this could help UK equities regain some of the ground against their overseas counterparts.

“Domestically focused companies in the UK have been left behind over the past three years as overseas earners have benefited from a weakening currency but this could reverse in 2020. The trust has a solid yield of over 4% and an OCF of 0.48% making it a relative low cost way of gaining actively managed UK equity exposure.”

Meanwhile, those with a more adventurous investment appetite may want to consider Coupland Cardiff Japan Income & Growth, according to Hughes.

While the Japanese market has been weak, Hughes said there is significant corporate change occurring which is making companies more focused on delivering shareholder returns. The Coupland Cardiff Japan Income & Growth Trust looks to capitalise on this changing dynamic with a focus on those companies that offer stable or growing yields.

Finally, income seekers should consider the City of London investment trust. While the UK has been out of favour, solid yields are now available with the trust yielding 4.5% from a dividend which is paid quarterly, making it useful for income seekers, AJ Bell said.

Hughes added: “Combine this with a hugely experienced manager, a track record of increasing dividends for 52 years and one of the lowest OCFs in the market at 0.39% and you have a trust that is well placed for income seekers and also those who want to reinvest that income over time.”

Professional Paraplanner