Our investment trust portfolio has been a great success. Merryn Somerset Webb assesses the outlook.
Six years ago we thought it would be interesting to see if we were as good at choosing whole portfolios ourselves as we are at carping about other people’s choices. So we started a small investment trust portfolio, the idea being to choose six that between them provided a good level of high-quality diversification; to check on them every six months but to trade them as rarely as possible; and to hope for the best.
I haven’t quite managed the six-month bit. But the rest has gone pretty well. We’ve made only three changes to the portfolio over the last six years. It now consists of Scottish Mortgage, Personal Assets, Caledonia, Temple Bar, Law Debenture and RIT, and our total return now sits at just over 116%. That number assumes that all investors are regularly rebalancing so they have equal amounts of all six, and it doesn’t take account of the transaction costs of doing so, but it nonetheless compares well with the 64.5% return from the FTSE All-Share and the 91% return from the MSCI World index over the same period.
We have benefited hugely from the inclusion of Scottish Mortgage in particular. Its shares are up a satisfying 297% since the 15th of June 2012 (launch date!). Caledonia has also done nicely. We bought it in late 2013 (as a replacement for the rather disappointing BH Macro) and it has gained 78% since. Finsbury provided a good boost in the first few years (116% to January 2017) and RIT has been satisfactory: up 78%.
Our slower movers have been the more value-orientated trusts. Personal Assets has done its core job of preserving capital regardless of market conditions. It is up 22%, beating inflation over the period (which has risen 13%), while Law Debenture (up 21% since September 2015) and Temple Bar (just under 2% since January 2017) are yet to have their time in the sun.