The trust that runs against the pack

Scottish Investment Trust (LSE: SCIN) is one such investment trust. The contrarian approach of the managers means the trust is risky but has plenty of potential for growth.

The trust has massively upped its stake in gold, with the top holdings including Newmont and Barrick Gold. Top holdings from the UK include defensive shares such as United Utilities, GlaxoSmithKline, and Tesco. If you think difficult times lie ahead then this could be a good trust to own.

In a blog in June, the manager said: “Governments now seem determined to create growth and, we suspect, will show increasingly greater tolerance for inflation. This would be a favourable backdrop for a contrarian investor.”

A dividend yield of 3% is steady if unspectacular. In these challenging times, I’d see that as a win if it can be sustained.

I also think there’s a margin of safety in buying the shares right now, as they are trading at a discount of around 11% to net asset value. The shares seem to have the potential to provide both income and growth.

A very different type of trust

Baillie Gifford US Growth Trust (LSE: USA) is a very different kettle of fish. Managed by Baillie Gifford – an investment outfit that is a big backer of Tesla – it unsurprisingly focuses on highly rated US stocks. It also has a strong tech slant to it.

Top holdings currently include the likes of Shopify, Amazon, Tesla, and Wayfair. Amazon’s price-to-earnings is over 100, which is astronomical, but it would be brave to bet against the shares right now and against the company continuing to grow. This is why I think investors are piling directly into the shares and also into trusts and funds that are holders of the shares. Technology has been one of the winners from the pandemic.

The Baillie Gifford US Growth Trust’s share price reflects this excitement, so it’s hardly a hidden gem. So far this year, the shares have risen by 60%. I think they could go further. The shares don’t pay a dividend and trade at a premium to the net asset value, so in some ways are riskier for investors. To invest you’d need to be confident that US tech companies will keep growing strongly.

Scottish and Baillie Gifford US Growth Trust are very different trusts in many ways, but I think they complement each other well. The manager styles are complete contrasts, and yet both have done well since the stock market lows of March. As such I think both these investment trusts are ideal for growth.

Scottish Mortgage isn’t the only FTSE-listed investment trust that’s performed well in 2020, due to exposure to exciting NASDAQ-listed technology companies though. Here, I’ll highlight three other growth-focused trusts that have delivered excellent returns for investors recently. 

Baillie Gifford US Growth Trust

Scottish Mortgage – which is Baillie Gifford’s flagship investment trust – seems to get all the attention when it comes to growth-focused trusts.

However, what’s interesting is that Baillie Gifford actually has a smaller growth-focused trust that has outperformed SMT recently. It’s called the Baillie Gifford US Growth Trust (LSE: USA).

This trust, which as its name suggests, is US-focused (SMT is global), aims to invest in growth companies that the portfolio manager believes have significant potential. Top holdings currently include the likes of Shopify, Amazon, Tesla, and Wayfair.

This trust was only launched in 2018, so it doesn’t have a long-term track record. Yet since its launch, it’s performed very well. Year to date, it’s up about 60%. With that kind of performance, I think it’s worth a closer look.

Ongoing charges are 0.77% per year versus 0.36% for SMT.

Allianz Technology Trust

Another tech-focused investment trust that’s performed very well recently is the Allianz Technology Trust (LSE: ATT). It actually outperformed Scottish Mortgage last year, returning 35%, versus 25% for SMT.

This trust invests with a global focus, as SMT does. Managed by the highly-experienced AllianzGI Global Technology team, it aims to invest in stocks that have the potential to be tomorrow’s Apple, Google, or Microsoft. It’s goal is to identify major trends ahead of the crowd, and hold companies that’ll create shareholder value with the introduction of new technology. Top holdings currently include the likes of Apple, Microsoft, Crowdstrike, and MongoDB.

Like Scottish Mortgage, this trust has a 5-star rating from Morningstar. For those seeking a pure technology-focused trust, I think it has a lot of potential.

Ongoing charges are slightly higher than SMT at 0.93% per year.

Smithson Investment Trust

Finally, take a look at Smithson (LSE: SSON). This is a small- and mid-cap-focused global equity trust run by the team at Fundsmith. This trust has a large weighting to the US (46% at 30 June) as well as a large weighting to the technology sector (40% at 30 June).

This is another trust that hasn’t been around for that long. It launched in October 2018. However, since then, it’s done pretty well. Last year, for example, it returned 30%, outperforming Scottish Mortgage by about 5%.

What I like about this particular trust is its focus on smaller, more under-the-radar companies. It doesn’t go for the Amazons and Teslas of the world. Instead, it invests in companies such as medical technology company Masimo and machine vision specialist Cognex. This makes it more unique and means it can help you diversify your portfolio more effectively.

Overall, I think this is a great little growth-focused investment trust that offers something different.

Ongoing charges are 0.9% per year.