The right investment trust can make you a millionaire… if you give it time. It won’t happen overnight, but with a bit of luck (and a bit of patience), that million could be yours. Here are three that have done the job.
Thanks a million
Making a million from investing is easier if your investments can roll up free of tax, so make good use of your £20,000 tax-free ISA allowance before it expires at midnight on 5 April.
Somebody who had invested their maximum stocks and shares ISA limit every year since the scheme launched in April 1999 will so far have contributed £186,560. If they had invested that in the average investment trust every year, they would now have a pot of £436,894, a whopping £250,334 gain in less than 20 years!
Thai me
Some funds have done far better, with the very best being Aberdeen New Thai (LSE: ANW). It’s a lesser-known specialist trust with an NAV of 677p per ordinary share with a market cap of c.£95 million that invests 100% in Thai equities. The trust, listed in the Country Specialists: Asia Pacific sector, would have turned your ISA payments into a cool £1,050,638, more than five times your original investment, according to research from the Association of Investment Companies (AIC), using Morningstar data.
Despite this, the trust trades at a large discount of -15%. My own research shows that recent performance has been less spectacular, with the fund up just 21.4% over the last five years, according to Trustnet.com, against sector growth of 110.4%. This is less than surprising given recent political upheavals, which saw the Thai army seize power in a coup in 2014. Current uncertainty may make it a good time to invest, depending on where you think Thailand is heading now.
Japan calling
Baillie Gifford Shin Nippon (LSE: BGS) — in the Japanese Smaller Companies sector — is the next investment trust millionaire maker, turning maximum ISA contributions into £986,344. In contrast to Aberdeen New Thai, the last five years have been a dream, returning an incredible 261.1% against 150.8% across its sector, Trustnet shows.
Success comes at a price. In this case, a massive premium of 9.84% to underlying NAV. But if you think the Japanese recovery has further to run, this £861m NAV trust could be the place to start.
The third millionaire maker (give or take £37,034) came as a surprise to me. Acorn Income Fund (LSE: AIF), in the UK Equity & Bond Income sector, delivered the third highest return on any investment trust at £962,966. This little-known offering from Premier Fund Managers, which has a NAV of just £441m, aims to provide high income from a portfolio of small- and mid-cap companies, plus capital growth. It currently yields 4.18%.
Mighty oaks
The trust targets companies under a £1bn market-cap with experienced management, sound operational controls, good cash generation and a progressive dividend. Recent performance has been strong, with growth of 88.3% over five years against 60.6% across its sector. It’s also trading at a premium, this time 5.87%.
As ever, past performance is no guarantee of future returns, but all three trusts have an impressive track record. Good luck with that million!