Riverstone Energy (LSE: RSE) is one of the market’s more eclectic investment trusts, which makes it the perfect choice for those investors looking to profit from global economic growth.
Riverstone invests exclusively in the global energy industry, with a particular focus on the exploration & production and midstream sectors. It invests directly in oil producing assets, which means it’s relatively defensive compared to trusts that invest purely in public traded equities. Also, Riverstone should produce a return that’s not correlated to the rest of the market.
Today, the company reported its figures for full-year 2017 revealing a 6.2% decline in net asset value per share to 1,527p, mainly thanks to the increase in the value of sterling during the second half of last year. On a dollar basis, net asset value per share increased 2.6%.
Mixed performance
During the year, Riverstone’s portfolio performance was mixed with its third largest investment, Liberty Resources II LLC, growing in value from 1x invested capital to 1.3x, thanks to a successful drilling programme and some acquisitions. Meanwhile, Meritage Midstream Services III LP is now marked at 1.8x gross multiple of invested capital following the acquisition of its second gas processing facility in 2017.
Still, like most oil-focused businesses, Riverstone has struggled over the past three years as oil prices have fallen. Now prices are recovering, management is optimistic. Indeed, commenting on today’s results chairman Richard Hayden said: “The improvement in oil market fundamentals offers a positive tailwind for the portfolio and provides an accommodative environment for Riverstone to exit some of its more mature investments in 2018.” This implies that during the year ahead, investors should see handsome returns as the company unwinds its portfolio and either reinvests or returns capital.
As shares in the trust are currently trading at a discount of around 30% to net asset value, I believe that this is one global investment opportunity that might be too good to pass up.
Brexit protection
Another global investment trust I’m positive about is Atlantis Japan Growth (LSE: AJG). Many investors overlook Japan because the region has struggled economically over the past few decades.
However, it now looks as if this trend is coming to an end with key economic indicators pointing to a recovery over the past 24 months. The economy is in its seventh consecutive quarter of expansion with annualised growth of 1.5% expected for the fiscal year ending in March 2018. Meanwhile, corporate Japan is expected to report 16% pre-tax profit growth over the same period.
But trading in Japan stocks is difficult for the average investor and that’s why I’d buy Atlantis.
Over the past five years, this trust has achieved a return for investors of 153% as Japanese small-cap stocks have powered ahead. Over the same period, a benchmark of UK small-caps has only returned 107%. So looking at these figures it certainly seems having the international diversification is worth the extra effort.
At the time of writing the trust is trading at a slight discount of 6% to its last reported net asset value per share of 255p.
