Could we see a crash before the year’s out? It’s possible. Sooner or later there’ll be one. But I wouldn’t let that stop me buying stocks today. Here are three I’d be particularly comfortable owning even if markets were to crash tomorrow.

Government-backed income

Primary Health Properties (LSE: PHP) invests in primary healthcare facilities in the UK and Ireland. Its latest acquisition is quite typical, being a modern purpose-built facility, fully let to a substantial GP practice and a pharmacy. This acquisition increases its portfolio to a total of 519 assets.

The properties are let on long leases and most of the rental income is backed, directly or indirectly, by the UK and Irish governments. The lease duration and tenant profiles give PHP an exceptionally secure rental income stream.

The company pays quarterly dividends. These have totalled 6.2p for 2021, giving a yield of 4.1% at the current share price. This is the 25th consecutive year of dividend growth.

One downside risk for PHP is that the appeal of the primary health property sector is attracting new purchasers, meaning the group is facing increased competition for viable opportunities. Nevertheless, management believes PHP “remains exceptionally well positioned to deliver low-risk sustainable shareholder returns”.

Flight to safety

Gold often does well when stock markets crash. This is one reason why I’d be happy to buy Endeavour Mining (LSE: EDV) today. The company has six producing gold mines across Burkina Faso, Côte d’Ivoire and Senegal. It also has a strong portfolio of advanced development projects.

Nevertheless, I need to be aware that operational setbacks are a risk with miners and can hurt earnings and dividends. Having said that, the impact on multi-asset EDV would be lower than for a single-asset producer.

The company has an attractive progressive dividend policy. It’s set minimum payouts for 2021 ($125m), 2022 ($150m) and 2023 ($175m). At the current share price, these equate to yields of 2.1%, 2.5% and 3%.

But there’s a further element to the dividend policy. Distributions may be supplemented with additional dividends and share buybacks, providing the prevailing gold price remains above $1,500 per ounce and the company’s leverage remains low. It’s currently buying back shares.

One-stop shop

A third stock I’d be more than comfortable buying today, regardless of the risk of a market crash tomorrow, is Personal Assets Trust (LSE: PNL). The trust has a long history of successfully meeting its investment objective “to protect and increase (in that order) the value of shareholders’ funds per share”.

It does this by diversifying not only across equities, but also other assets. Equities currently account for 41.4% of its portfolio. Its top five stock holdings are Microsoft, Alphabet, Visa, Nestlé and Unilever. Meanwhile, it has 30.3% in US index-linked bonds, 20.3% in cash and UK treasury bonds, and 7.9% in gold bullion.

PNL’s multi-asset positioning mitigates the impact of a stock market crash. But on the other side of the coin, there’s the risk — almost an inevitability — that it will underperform in rampant bull phases of equity markets. I also need to be aware that it has an extremely conservative dividend policy and a current yield of just 1.1%.

Here, I’ll look at the pros and cons of the available options. And tell you about my one UK stock for life.

How I wouldn’t invest £500

First off, let me say I’m not a gambler. I don’t look at the stock market as a casino and wouldn’t punt my £500 on a to-the-moon-or-bust ‘story stock’.

I might just win big, but there’s a high risk of blowing my money completely. A permanent loss of capital — even the relatively small sum of £500 — can be costly over a lifetime.

A better option

If I wouldn’t invest £500 in a story stock, how about a well-established profitable business? That’s more like it, in my book. But there’s still a risk I could pick a company that turns out to be a dud. For example, Carillion, Debenhams and Thomas Cook have all gone bust and wiped out their shareholders in recent years.

If pushed, I’d pick a global business with strong, consumer staples brands and reliable cash flows. I think Unilever is a good example. However, there’s another approach I could take to invest my £500.

One-stop-shop diversification

As mentioned earlier, there are numerous investment companies listed on the stock market. Most of them invest in a range of other companies. This one-stop-shop ‘diversification’ reduces risk, and appeals to me.

However, I still have scores of investment companies to pick from. Should I go for an industry specialist, like Polar Capital Technology Trust? How about a country specialist, such as Fidelity China Special Situations? Or would I be better off picking a company that invests across many industries and countries, like Monks Investment Trust?

The one stock I’d invest £500 in for life

Personal Assets Trust (LSE: PNL) sits well with my attitude to risk and reward. Its policy is to “protect and increase” (in that order) the value of my investment. Its holdings are diversified across the four traditional asset classes: equities, bonds, gold and cash.

At its last financial year end, 43% of PNL’s portfolio was in equities. Its top 10 holdings included Microsoft, Visa, andNestlé. Bonds represented 41% of the portfolio. It also had 11% exposure to gold and held 5% cash.

PNL reported on its long-term performance. Since 1990, it’s grown its net asset value at a compound annual growth rate of 7% compared to 4.4% for the FTSE All-Share index and 2.8% for RPI inflation.

PNL’s share price is £485, as I’m writing. This means I could buy one share with my £500! If PNL were to reproduce its historical growth rate for the next 60 years, my little ol’ £485 share would be worth over £28,000 (or £5,740 in real terms, adjusted for inflation). It’d count that as a decent return on my investment.

Of course, past performance is not necessarily a good guide to the future. My £485 share may not increase in value as calculated above. However, I think there’s a very low risk of losing my capital. This is because of PNL’s diversification across and within different asset classes.

With that in mind, today, I’m going to take a look at one share I think could be the perfect investment for the next market decline. 

Stock market crash investment

If you have £5,000, or any other amount to invest, it could be worth considering the Personal Assets Trust (LSE: PNL) for your portfolio. Now, strictly speaking, this isn’t a single share. It’s an investment trust which owns a basket of different assets.

The structure might put some investors off, but I think it’s the trust’s most significant advantage. If you’re not put off by the structure, it may be worth considering this investment instead. 

The single overriding aim of the trust’s management is to protect and grow shareholder capital over the long term. We only need to look back at the last stock market crash earlier this year see just how well management has been able to accomplish this aim.

In March and April, when the FTSE All-Share slumped by nearly 40%, shares in Personal Assets declined by just 10% before staging a healthy recovery.

Year-to-date, shares in the investment trust have risen by 6%, compared to a loss of 23% for the FTSE All-Share, excluding dividends. Put simply, the trust took the stock market crash in its stride. 

Over the past five years, it has produced an even better performance. Since the beginning of October 2015, Personal Assets has outperformed the FTSE All-Share by 40% excluding dividends. 

Defensive portfolio

Personal Assets’ goal to protect and grow shareholders’ capital has lead the business to operate a defensive portfolio. Around 50% of assets are invested in high-quality shares, companies like Microsoft. The rest of the portfolio is made up of high-quality bonds and precious metals. 

This split between bonds, gold and growth stocks, helped the trust ride out this year’s stock market crash. It then benefited from the market recovery in the weeks after. 

Thanks to its defensive positioning, I reckon it’s highly likely Personal Assets will be able to repeat this performance the next time around. And if there isn’t another market slump, then its allocation towards equities will help the trust benefit from the market rally. 

The bottom line

All in all, if you’re looking to invest a lump sum in the stock market today, Personal Assets could be the best investment to buy now. The outlook for stocks and shares is highly uncertain, so the best way to invest in this market may be to adopt a conservative position. That’s precisely what Personal Assets has done.

As we have seen this year, the conservatives positioning should allow the firm to profit whatever the future holds for the stock market and investors around the world.

Indeed, there are many risks to the market recovery on the horizon and even in recent days we’ve seen markets falling again.

A second wave of coronavirus, a sluggish economic recovery or a wave bankruptcies as companies struggle under the burden of debt built up during the crisis, could send investor sentiment plunging once again and cause yet another stock market crash this year.

As such, now may be an excellent time to prepare for a second stock market crash. And there’s one stock in particular that could help investors weather the storm, I feel.

Stock market crash round two

Personal Assets Trust (LSE: PNL) invests with the single goal of protecting and growing investors’ capital over the long term.

It has accomplished this aim in 2020. Shares in the investment trust have gained 4% year-to-date. That’s compared to a loss of 16% for the FTSE 100 in the stock market crash.

The performance of the trust is just as impressive over the long run. Over the past five years, it has returned 27% excluding dividends. That’s compared to a loss of 7% for the FTSE 100 over the same period excluding dividends.

This track record suggests Personal Assets could help protect investors’ wealth if a second stock market crash arrives.

Strong portfolio 

The trust’s secret is its asset allocation. Most of the portfolio is invested in inflation-linked bonds. These provide a steady above inflation return over the long run. Gold, a great asset to own in any stock market crash, also makes up a large percentage of the portfolio.

Equities also feature in Personal Assets’ portfolio. Stock make up about 44% of assets and the investment company is very strict about choosing companies to fit into this investment portfolio. It will only own high-quality, defensive businesses with strong balance sheets that should continue to benefit from cyclical tailwinds. Microsoft, Nestlé, and Unilever are currently its largest holdings.

The large allocation towards bonds may mean that the trust does not perform as well as equity indexes such as the FTSE 100 and FTSE 250 over the long term. However, it also means that the trust does not suffer as much as these indexes in the event of a stock market crash. In times of uncertainty, this sort of protection is invaluable.

As it is impossible to tell what the future holds for the stock market, and if there will be a second stock market crash in 2020, owning Personal Assets as part of a diversified portfolio could be a sensible financial decision. Its extensive positive track record also suggests that the fund may help you grow your financial nest egg over the long run.

This is a great advantage at a time when many other businesses are having to cut dividends to conserve cash. 

Furthermore, investment trusts have more options when it comes to selecting investment assets. They can own stocks, bonds, real estate, precious metals, cash, and many other different asset classes.

Investment trusts to buy

Personal Assets Trust (LSE: PNL) is an excellent example of the diversity of investment trusts. This firm was set up with the single goal of protecting and growing private investors’ capital over the long term. And management appears to be meeting this goal.

The trust, which currently supports a dividend yield of 1.3%, has lost around 4.7% this year. However, the FTSE All-Share has lost around 30% over the same time frame. 

Personal Assets’ portfolio is stuffed full of defensive assets. The most significant position in the portfolio right now is gold. It makes up 9% of assets under management. Cash makes up 5%, and fixed-income securities make up around half of the portfolio.

Are you looking for an investment trust to add to your Stocks and Shares ISA in this market crash? I think it might be worth taking a closer look.

Henderson International Income Trust

With that dividend yield of just 1.3%, Personal Assets doesn’t offer much in the way of income. So investment trusts with an income focus could be the better option for income-seeking investors. Especially those with a long-term time horizon. I think Henderson International Income Trust (LSE: HINT) is a great option here.

With a current dividend yield of 5%, Henderson’s income offering looks attractive in the current interest rate environment. It’s now dealing at a slight discount to net asset value. But historically, the trust has commanded a premium to net asset value.

Some of the most attractive income stocks in the world feature in the portfolio. These include Microsoft and consumer goods giant Nestle. International equities make up almost all of the portfolio. 

Put simply, if you’re looking to buy a diversified international income stream, this could be one of the best investment trusts out there.

Henderson Smaller Companies Investment Trust

For investors looking for exposure to fastest-growing small businesses, Henderson Smaller Companies (LSE: HSL) has an excellent track record of picking winning stocks.

Investing in small growth companies is a risky business. Therefore, gaining exposure to the sector through investment trusts is a great way to reduce risk while profiting from company growth at the same time.

Henderson has 105 different holdings in its portfolio. It charges an annual management fee of just 1.42%. On top of this, the trust supports a dividend yield of 2.6%. The distribution has risen every year since 2000. That’s nearly 20 years of consecutive dividend increases.

Today, investors can buy this trust at a discount of 5% to net asset value. If you’re looking for a way to invest in small-cap growth businesses, without having to pay a hefty fee, Henderson’s offering appears to tick all the boxes.

This is a challenging environment for investors to navigate. However, there are a couple of funds that stand out right now as safe harbours in rough waters.

Personal Assets Trust

The Personal Assets Trust (LSE: PNL) is a relatively unique investment trust. Its goal is to protect and grow the wealth of its investors over the long term. Management places emphasis on the protection part of its investment mandate.

As such, inflation-linked bonds and precious metals feature heavily in the trust’s portfolio. Commodities and fixed income securities currently make up more than two-thirds of the collection. The trust also owns a selection of high-quality blue-chip stocks.

If you’re looking for an investment fund that’s trying to beat the stock market, Personal Assets isn’t for you. However, if you’re looking to protect and grow your wealth, it could be worth considering.

Over the past 10 years, it’s achieved an average annualised return of 5.8%, with relatively minimal volatility.

A dividend yield of 1.3% provides a level of income that exceeds most savings accounts, and an annual management fee of 0.65% is relatively low.

Scottish Investment Trust

The Scottish Investment Trust (LSE: SCIN) is another trust that’s structured to outperform in all market environments, billing itself as a contrarian investor. It likes to buy out-of-favour stocks, which are in the process of restructuring. It also aims to provide dividend growth ahead of UK inflation.

Research shows value stocks tend to outperform in volatile markets. Meanwhile, growth stocks suffer the most as investors usually rush to sell these holdings first. This suggests Scottish could produce market-beating returns in the current environment.

Indeed, the most substantial holdings in the trust’s portfolio as some of the most defensive stocks around. These include Tesco, gold miner Newcrest and GlaxoSmithKline.

Management has also shown willingness to deploy extra capital repurchasing shares when they’re trading a significant discount to net at a value, which enhances returns over time.

The investment trust currently supports a dividend yield of 3.1%, is trading at an 11% discount to net asset value, and charges just 0.58% per annum in management fees.

Henderson International Income Trust

The great thing about dividend stocks is that they can give you a steady income in times of market volatility. That’s why the Henderson International Income Trust (LSE: HINT) has to feature on a list of top investment trusts to buy in the current environment.

It owns some of the most highly-regarded income stocks in the world, including Microsoft, Coca-Cola and Nestle. It currently offers a dividend yield of 3.7% and is trading at a slight discount to the net asset value.

Since the trust was launched in 2011, its net asset value as grown by nearly 90%, including dividends.

That suggests this trust can provide a steady return for investors in all marketing environments. With an annual management fee of 0.84%, it doesn’t charge the world for this performance either.

For long-term dividend-focused investors, this trust seems to tick all the boxes.

Buffett hasn’t been dumping all his equity holdings — he continues to see value in some stocks — but the corollary of a broad market overvaluation is an elevated risk of a market crash.

If you’re looking to increase the defensive qualities of your portfolio, or are a new investor wanting to get started in the stock market but worried this could be exactly the wrong time, I think the two stocks I’m looking at today — Personal Assets Trust (LSE: PNL) and Capital Gearing Trust (LSE: CGT) — are well worth considering. Indeed, I’d be happy to buy both for 2020, whatever the stock market has in store for us.

Protection and firepower

Like Buffett’s Berkshire Hathaway group, Personal Assets and Capital Gearing aren’t constrained geographically or restricted to holding only equities. And like Buffett, the two trusts’ managers see value in some stocks, but a broad overvaluation in equity markets.

Both trusts currently have a 32% exposure to equities and large holdings of cash and low-risk liquid assets. As such, in the event of a continuing bull run in equities, shareholder returns at Personal Assets and Capital Gearing aren’t going to shoot the lights out.

However, in the event of a crash, they’re positioned to offer a good bit of protection. It’s notable, for example, that since 2000, despite the crashes of the dotcom bust and great financial crisis, Capital Gearing’s maximum ‘drawdown’ (share price decline from peak to trough) has been just 9%.

Furthermore, if there is a market crash, the two trusts — like Buffett — have considerable firepower to snap up equities at bargain-basement prices. For example, Personal Assets’ exposure to equities was over 70% coming out of the financial crisis, compared with 32% today.

Diversification

The reason I’d be happy to buy both trusts is, while they each currently have a 32% exposure to equities, there is diversification in the equities they hold, as well as in the make up of their other assets.

In equities, Personal Assets favours a high-conviction portfolio of individual stocks. Its top five holdings are Microsoft, Nestlé, Unilever, Coca-Cola and British American Tobacco. Capital Gearing holds some individual stocks, but is focused more on whole-market trackers and other collective investments. Its top five holdings are iShares Core FTSE 100 ETF, Vanguard FTSE Japan UCITS ETF, Grainger, Investor AB and North Atlantic Smaller Companies.

There are also differences in the two trusts’ fixed income portfolios. For example, both have over a third of assets in index-linked government bonds, but Personal Assets is heavily skewed to the US, while Capital Gearing is a little more diversified. Similarly with gold, the former trust has a 9% exposure and the latter 1%.

Bottom line

To summarise, if you’re looking to add some defensive qualities to your portfolio, I think Personal Assets and Capital Gearing are well worth considering. Meanwhile, if you’re a new investor wanting to get started in the stock market, but reluctant to go ‘all-in’, I think these two trusts offer a good compromise.

When I tell them I’m investing in shares in my SIPP to help me in my old age, there’s a common “ooh, that’s a big gamble, isn’t?” response, coupled with a similar take to Woody Allen’s “A stockbroker is someone who invests other people’s money until it is all gone.”

If you don’t feel confident picking your own shares and don’t want to trust your cash to an advisor, I reckon investment trusts are therefore a great way to go. They spread your money and provide diversity and, as you are both the owner/shareholder and the customer, there’s no conflict of interest.

Safety is the key

Personal Assets Trust (LSE: PNL) is an investment trust aimed solely at private investors, and over the past five years its share price has gained 25% while the FTSE 100 has only managed a disappointing 7%. Dividends are modest at around 1.5%, which is behind the Footsie’s average level, so I think I’d describe the trust’s overall returns as competent but not sparkling on first examination.

But its stated policy is “to protect and increase (in that order) the value of shareholders’ funds per share over the long term,” so it’s aimed at low risk investments. On that basis, I think it’s doing pretty well.

First-half figures released Friday show net asset value (NAV) up 1.9% to £395.50 per share, and the shares are currently trading at £398.10. That’s a premium of just 0.6%. The trust has a long history of trading close to NAV, which makes me think it’s pretty much hit the sweet spot between safety and growth, at least in terms of what its shareholders want.

For those who want to invest some cash but who see safety and low risk as their priorities, Personal Assets Trust could well be worth a closer look.

Great income investment?

I’m less concerned by risk myself, and I like the look of HICL Infrastructure Company (LSE: HICL). While some individual property, construction and infrastructure companies have been going through a bit of a tough time, HICL has seen its share price rise by 21% over the past five years.

That’s slightly less than Personal Assets Trust’s gain, but HICL pays significantly bigger dividends, with forecasts indicating yields of above 5% for the current year, and next.

Earnings have been erratic, as they frequently are in the infrastructure business, but investment trusts like this typically even things out over the long term to provide steady dividend income. And HICL’s record of doing that, and of keeping its dividend progressive, make it, as far as I’m concerned, a good investment for retirement income.

The trust’s first-half figures this week showed a 15% annualised NAV total return, with NAV reaching 156.4p at 30 September (from 149.6p in March). That puts the 159p shares on an undemanding premium of 1.7%, and for this level of performance I see that as an attractive price.

These two investment trusts are conservatively managed, with capital preservation as their first priority. While they may not rise as extravagantly as some of their peers in raging bull markets, they don’t fall as heavily when markets crash. By this means, they’ve built up their long records of market outperformance.

RIT large

RIT Capital Partners is chaired by Lord Rothschild and enables private investors to invest alongside the famous family of financiers to protect and enhance their wealth over the long term.

According to the trust’s latest results, “£1,000 invested in RIT at inception in 1988 would be worth in excess of £30,000 today compared to the same amount invested in the MSCI All Country World Index which would be worth approximately £6,700.” And this has been achieved by the trust having “participated in 75% of market upside but only 39% of market declines.”

Part of RIT’s success comes from its ability to invest without restraint. It’s able to allocate capital internationally, across a range of asset classes, both quoted and unquoted. It also utilises the talents of some external fund managers, providing exposure to investment areas (for example, hedge funds) that are largely inaccessible to small private investors.

Currently, with “share prices have in many cases risen to unprecedented levels at a time when economic growth is by no means assured,” the trust is cautious. It stated in its latest results: “We do not believe this is an appropriate time to add to risk.” Regular quoted equity (long) represents 36% of the portfolio, with the remainder in diverse assets, notably absolute return & credit (25%), private investments (22%) and hedge funds (21%).

PAT on the back

Personal Assets Trust’s investment policy is “to protect and increase (in that order) the value of shareholders’ funds per share over the long term.” As well as the similar philosophy to RIT, PAT shares its current cautious view of markets, stating: “After a prolonged bull market in both bonds and equities we therefore remain focused on capital preservation, not the maximisation of upside.”

PAT’s equity exposure is 43%, with its holdings being predominantly defensive global giants. Its current top five positions are Philip Morris, British American Tobacco, Microsoft, Nestlé and Coca-Cola. In contrast to RIT, hedge funds and private investments don’t feature, with the remainder of PAT’s portfolio being in US and UK inflation-linked and short-dated government securities (44%), gold (9%) and cash (5%).

So, while RIT and PAT share a common investing philosophy and current general outlook on markets, their portfolios are far from identical, making both trusts well worth holding, in my view.

Some people may think this is a good reason to quit shares altogether, but they would be wrong. Equity investing is the best way to build your long-term wealth, and that wall of worry is always scaled in the end. However, it can make sense to have a safety net.

Up close and personal

Investment trust Personal Assets Trust (LSE: PAT) is designed for days like these. The fund’s remit is to try to make as much profit as we safely can when markets rise and minimise losses or even achieve modest gains when markets fall. It does this by investing in a spread of mostly US and UK blue-chip stocks that will be familiar to regular Foolish readers, including Philip Morris, British American Tobacco, Coca-Cola, Nestlé, Microsoft, Berkshire Hathaway, Unilever, American Express and GlaxoSmithKline.

That is possibly the most solid, defensive line-up of stocks I can remember, but the trust throws in US Treasuries and UK gilts, just to be sure. Personal Assets Trust has reported today and put in a solid performance. Over the six months to 31 October 2016 its net asset value (NAV) per share rose 7.5% to £394.85, while the share price climbed from £372.50 to £397, up 6.5%.

A question of trust

If that isn’t shoot-the-lights-out-performance, it isn’t meant to be. The fund’s investment adviser Sebastian Lyon can see plenty of virtue in being so cautious in these troubled times, pointing out that the FTSE 100 Index has now traded between 6,000 and 7,000 for three and a half years. He is wary of rising political anger now that “Trump has trumped Brexit”, warning that “political outcomes are likely to offer investors asymmetric risks, skewed to the downside”, and is responding defensively.

The trust’s share price is up 14% over the last year, according to Trustnet, but just 24% over five years. This compares to returns of 12% and 49% on the HSBC FTSE 100 tracker over the same period, which suggests that caution doesn’t always pay.

Perpetual question

Tell that to Mark Barnett, who runs £1.1bn investment trust Perpetual Income & Growth (LSE: PLI), which targets primarily on UK blue-chip FTSE 100 favourites, plus some FTSE 250 and international exposure. Top holdings include Reynolds American, British American Tobacco, AstraZeneca, BP, Imperial Brands and BAE systems. It has returned an impressive 78% over the past five years but is more inclined to volatility than Personal Assets Trust, falling 7% over 12 months.

Barnett favours companies with visible revenues, profits and cash flow, and aims to deliver capital growth and a growing dividend over the long term. His trust currently yields 3.5% and trades at a 5% discount to NAV. Personal Assets Trust, by contrast, yields just 1.45%, and trades at a small premium of 0.99%.

Perpetual Income & Growth’s Recent disappointing performance may be down to its exposure to financial and pharmaceutical stocks, which have struggled lately. Barnett has delivered a total return of 437% since 1999, double the sector average. The discount, higher yield and proven long-term outperformance makes this the pick of the two funds for me — but for sheer defensive solidity, Personal Assets Trust is hard to beat.