Could these investment trusts help to you achieve financial independence?

These trusts should continue to pump out returns for investors for many years to come.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Investment trusts are one of the oldest investment vehicles. For more than a hundred years investors have been using these companies to pool, protect and grow their wealth. 

RIT Capital Partners (LSE: RCP) is one of the most successful investment trusts there is. Chaired by Lord Rothschild, since 1988 the company has produced an annual return of 12.9% for investors, turning £1,000 into £30,000. 

Since 1990, it has returned 470%, eclipsing the FTSE 100’s return of 19.5% over the same period excluding dividends. 

Should you invest £1,000 in AstraZeneca right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if AstraZeneca made the list?

See the 6 stocks

Finding value of the market 

Today RIT reported its results for the first half of the year, which showed yet another strong investment performance. Net asset value per share increased to 1,784p with a total return of 4%, from 1,730p, while pre-tax profit rose to £111.1m from £89.6m.

One of the greatest benefits of investing in RIT is that the firm is able to put its money into unquoted companies, offering a level of diversification not available to most private investors. Indeed, today the company reported that its net quoted equity exposure averaged 43% during the first half and management has been looking for more private market opportunities to reduce exposure to expensive public markets. To that end, RIT has invested in US-based Social Capital LP, which it called one of “Silicon Valley’s leading technology investment firms“. 

Overall, the investment trust is directing its exposure to “investments which will benefit from the impact of new technologies, and Far Eastern markets, influenced by the growing demand from Asian consumers,” according to Lord Rothschild. 

Not cheap 

Unfortuntately, because RIT has generated such impressive returns for investors during the past decade, shares in the trust are not cheap. At the time of writing the shares are changing hands at 1,941p, a premium of 8.8% to net asset value. After increasing its interim dividend payout by 3.2% today, RIT is on track to pay out 32p per share to investors for the full-year, giving a dividend yield of 1.6%. 

Still, even though it is trading at a premium to net asset value, if the firm can continue to produce double-digit returns for investors every year, this is one company that you can rely on to increase your wealth. 

Undervalued 

Alliance Trust (LSE: ATST) might be a better choice than RIT if you’re looking for a trust that’s trading at a discount. It has struggled over the past few years, which has resulted in investors avoiding the firm, but a recent shake-up has put an end to the poor investment performance. 

Alliance Trust reported a net asset value total return of 12.4% over the six months to June 30. This compares with a 6.4% return from the MSCI All Country World Index over the same period. The better performance, coupled with the trust’s restructuring has sent its shares higher by 22% excluding dividends over the past year, and there could be further gains ahead. 

Based on the most recent figures, Alliance’s net asset value per share is just under 749p, 4.6% above the current price of 417p. Management has instigated a stock buyback to try and reduce this discount. The shares support a dividend yield of around 1.8%. 

Should you buy AstraZeneca shares today?

Before you decide, please take a moment to review this first.

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Investing Articles

Close-up of a woman holding modern polymer ten, twenty and fifty pound notes.
Investing Articles

£20,000 in an ISA? Here’s how it could target £1,250 a month in passive income

A Stocks and Shares ISA can be a platform for someone with spare cash to set up a sizeable second…

Read more »

Close-up as a woman counts out modern British banknotes.
Investing Articles

3 UK shares I own for easy passive income

Christopher Ruane runs through a diverse trio of UK shares he currently owns, each of which generates passive income in…

Read more »

UK coloured flags waving above large crowd on a stadium sport match.
Investing Articles

Is the UK-US trade deal a brilliant buying opportunity for FTSE 100 shares?

A long-awaited trade deal has been struck between the UK and the US, but how much will FTSE 100 stocks…

Read more »

UK supporters with flag
Investing Articles

3 growth stocks up 27% in a month to consider buying now

Stock market volatility has been a brilliant opportunity to buy growth stocks, which are now rebounding at speed. Harvey Jones…

Read more »

Young happy white woman loading groceries into the back of her car
Investing Articles

This FTSE 250 stock has returned over 300% since 2020

After missing out on a 300% return from a FTSE 250 stock five years ago, Stephen Wright is ready for…

Read more »

Investing Articles

Is this one of the most undervalued stocks on the London Stock Exchange?

A market-beating investment manager has just unveiled some of his latest buys from the London Stock Exchange. And this is…

Read more »

Business manager working at a pub doing the accountancy and some paperwork using a laptop computer
Investing Articles

Forget side hustles! This is how I’m building a second income from stocks

Motley Fool analyst Zaven Boyrazian explains his strategy for building a substantial second income in the long run with British…

Read more »

Close-up of children holding a planet at the beach
Investing Articles

The top 4 stocks to buy now and 1 to avoid — according to market experts!

Jefferies experts have highlighted their top picks to profit from surging European defence spending, as well as a company they…

Read more »