Don’t be fooled by the name. Scottish Investment Trust (LSE: SCIN) is an £867m international fund that invests all over the world, although it is based in Edinburgh.
Victorian values
This specialist global trust was formed in 1887 to give investors an efficient way to invest around the world, which gives you an enduring platform on which to build your retirement portfolio. It is around 35% invested in North America, 25% in the UK, 15% in Europe, 10% in Japan and 5% in the rest of Asia Pacific.
That looks a balanced spread and recent performance has been solid with a return of 55% over five years, against just 3.5% on the FTSE 100. However, this is below the average for its sector, investment trust global, which rose 72% over the same period.
The Scottish play
Scottish IT has just published its annual results to 31 October and rewarded loyal investors with the 35th consecutive year of regular dividend increases, up 6% this year to 21.2p, plus an additional special dividend of 4p. The current yield is only 2.52% but as you can see, management policy is progressive.
Over the year it delivered a 1.9% share price total return. Although it does not have an official benchmark, the international MSCI All Country World Index beat it, growing 3.4%. If that disappoints you, then consider these global trusts instead.
Scottish IT trust adopts a contrarian, high-conviction approach to global stock markets, focusing on stocks that are out of favour with mainstream investors, believing they offer the greatest potential for long-term gains. Value investors, in other words. This may explain recent relative underperformance, as growth stocks have held sway. However, the cycle may now be moving back in favour of value, and this could help you play the shift. It currently trades at a 9% discount to underlying net asset value. Here are another two more trusts worth looking at.
Ride this train
Lindsell Train Investment Trust (LSE: LTI) is in the same global IT sector and is up a thumping 270% over the past five years, helping to establish co-managers Nick Train and Michael Lindsell as two of the hottest properties in UK fund management.
They are much better known for their blockbuster unit trusts such as the £5.6bn LF Lindsell Train UK Equity Fund (up 67% over five years) and £5.6bn Lindsell Train Global Equity (up 144%), but as you can see, their investment trust has done even better.
Premium price
The trust is a relative minnow with a net asset value of just £810m and I wondered why, but then I noticed that it trades at a massive 44% premium to the underlying net asset value of its portfolio. Most trusts trade at discounts of up to 10%-15% of perfectly good funds, a handful trade at a premium, typically 2%-3%. I’ve never seen one anywhere near as big as this one.
This is a real testament to the popularity of its managers but I would avoid this trust as a result. Maybe you should check out the Lindsell Train range of open-ended unit trusts instead, where premiums and discounts are not an issue, and performance has been superb.