But while shares have beaten other forms of investment hands down for more than a century, a lot of people are wary of picking their own and don’t like the perceived risks. That’s why so many opt for pooled investments, but what’s the best kind?

For me, I don’t want to hand over my cash for someone else to manage and take their commission (and put the interests of their shareholders first, not me). 

Capital growth

I think an ideal solution is to buy shares in investment trusts, which makes you the shareholder and the recipient of all that lovely commission. Speaking of which, I’ve been impressed by the performance of Pantheon International (LSE: PIN), which released an August performance update on Wednesday.

Pantheon shares have more than doubled in value over the past five years, while the FTSE 100 has managed a measly 2% gain. 

Pantheon, which invests in various other funds including private equity funds, reported a 4.4% rise in net asset value (NAV) over the month, keeping its recent month-by-month rises going nicely. And with a stated NAV of 2,572p per share, and the shares priced at 2,160p after a 3% rise in morning trading, we’re looking at a discount of 16% at the moment. While investment trusts typically do trade at a discount to NAV, 16% looks attractive to me.

Pantheon also generated £14.8m in net cash during the month, and completed five new investments for a total of £29.6m in such fields as healthcare, engineering and biotechnology. So it looks pretty well diversified to me.

Pantheon aims at capital growth, and pension investors will probably be looking for income investments too.

Income

That brings me to North American Income Trust (LSE: NAIT) which has been paying progressive dividends of around 3-4%.

The share price has also done pretty well, with a 65% gain over five years for an impressive total return. As its name suggests, the trust targets its cash mainly at American S&P 500 stocks, so that should provide some clear international, and hopefully Brexit-proof, diversity too.

In its first half, reported Wednesday, the trust saw its NAV per share grow by 7.2%, in sterling terms. And over the past three years, the cumulative NAV return came to 85.6% (against the S&P 500’s 69.5%).

The dividend which, conveniently for income seekers, is paid quarterly, saw a first-half boost of 6.7%, and that’s keeping nicely ahead of UK inflation.

The North American portfolio is currently 93%-invested in equities, covering 41 individual holdings (with a small amount invested in 11 corporate bonds). That looks well diversified to me, and it would be tough for most private investors to emulate that kind of spread.

These two investment trusts look to me like a nice pair for a retirement portfolio.

In America we Trust

The North American Income Trust (LSE: NAIT) is a venerable investment trust with a long history, having launched way back in 1902. Recent performance has been strong, according to Trustnet.com, with a return of 96% over the past five years, against an average of 66% across its benchmark North America sector. However, the last six months have been tougher on the US as the Trump rally loses steam.

Today the trust has published its half yearly report to 31 July, and it reflects this slowdown. The company’s net asset value per share rose just 0.6%, slightly ahead of the Russell 1000 Value index return of 0.5% but behind the S&P 500 index return of 4.5%.

Income dream

This still looks a tempting US income play to me, especially given a progressive dividend stance from the board. Buoyed by a 15% rise in revenue per ordinary share it declared a second quarterly dividend of 7.5p per share, taking total first-half dividends to 15p. That is a rise of a 7.1% following last year’s 9.1%. Currently, the trust yields 3.1% against 2.4% and 2% on the Russell 1000 Value and S&P 500 respectively. 

North American Income Trust invests in a concentrated portfolio of just 45 equities and eight corporate bonds. It has a high strike rate with approximately half of its equity holdings raising their dividends over the past six months, by an average of 8%. Chairman James Ferguson reckons US corporate fundamentals continue to improve steadily and income stocks are due a revival: “Many cash generative companies which pay dividends have been out of favour but this sector is becoming more attractive because the risk of higher interest rates has been discounted.” This £409m fund has the added attraction of trading at a discount of 9.61%. 

Mid-cap marvel

Another overlooked investment trust that has outpaced its sector, JP Morgan Mid Cap (LSE: JMF), published its final results last Friday, and I feel like calling it to your attention. It invests in medium-sized UK companies listed on the FTSE 250 Index and has returned a stonking 178% over the last five years, more than double the 78% return on its benchmark UK All Companies index. 

The fund reported a 30.4% total return on net assets against 21.5% on its benchmark, despite Brexit uncertainty, which hit FTSE 250 companies relatively hard. The trust achieved this by reducing exposure to companies focused on the hard-pressed UK consumer and shifting into more resilient sectors. Management team Georgina Brittain and Katena Patel, both appointed in the last five years, deserve their glory.

Living it large

The fund acknowledges that UK mid-caps have suffered from Brexit fears but says these are over-pessimistic with UK companies well placed to take advantage of new opportunities in faster growing countries outside the eurozone. Mid-caps have thrashed large-caps lately and if you think this will continue, this trust is a good way to join in the fun.