3 top investment trusts I’d buy for a new £20,000 Stocks and Shares ISA

Investment trusts can play an important and lucrative part in a portfolio. Here’s three that are exposed to massive global growth opportunities.

| 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.

Black father and two young daughters dancing at home

Image source: Getty Images

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 offer diversification and the chance to earn very decent returns. Here’s three of my favourite trusts I’d buy today if I were starting a new £20,000 Stocks and Shares ISA.

High-quality UK stocks

I think Finsbury Growth and Income Trust (LSE: FGT) is a great way to capture the growth of some exceptional UK-listed firms.

The trust is managed by Nick Train, who uses a bottom-up stock picking approach to assess the fundamentals of an individual business.

Five Largest Holdings (to 31 March)

Weighting
RELX12.4%
Diageo11.0%
London Stock Exchange10.3%
Burberry Group10.2%
Unilever8.8%

The portfolio is extremely concentrated, with 83.5% of assets in just 10 stocks. So there’s a risk this high-conviction investing style produces periods of underperformance if certain big holdings struggle.

However, the trust’s long-term performance has been exceptional, more than doubling the 10-year return of its FTSE All-Share Index benchmark.

I expect Diageo, RELX, and Burberry all to do very well over the next decade. Each is truly global, with substantial growth opportunities.

The manager has a multi-decade investing horizon, which matches my own. If I didn’t already own many of the holdings in my own portfolio, I’d add this trust to my ISA today.

The ongoing charge is 0.60%.

Global mining

My second pick is BlackRock World Mining Trust (LSE: BRWM). As the name suggests, the trust runs a diversified portfolio of global mining stocks.

My investing thesis here is that the decarbonisation of the global economy will take many decades and need a massive amount of raw materials. That includes iron ore for wind turbines, lithium for electric vehicle batteries, and copper for electrical wiring.

All of this is covered by the mining companies held in the portfolio. Top holdings include copper giants BHP Group and Rio Tinto.

Global mining has been beset by underinvestment for a long time. That means there will likely be global shortages of metals (particularly copper), which should translate into higher prices and earnings.

As well as the potential for major growth, there’s also a juicy 5.9% dividend. Growth and income is the sweet spot for me, and I reckon this trust offers both in spades. It’s why I own it.

One thing worth considering is that the mining sector can be very volatile, causing large swings in the trust’s share price.

The ongoing charge is 1.06%.

Rapid Growth

Pacific Horizon Investment Trust (LSE: PHI) invests in the Indo-Pacific region (excluding Japan). Top holdings include Samsung and Ping An Insurance.

Asia is the fastest growing region in the world. Indeed, it’s expected to contribute more than half of global growth in the next few decades.

This investment is an ideal vehicle for me to get exposure to this rapid growth. That said, around a third of assets are invested in China, which creates risk if its relations with the US worsen.

One thing I like about the trust is that it invests wherever it sees opportunities. It’s not just the tech sector. Therefore mining and energy stocks are well represented in the portfolio. This provides welcome balance and I like the low-cost 0.74% fee.

Finally, the shares are trading at a 9.8% discount to the net asset value (NAV) of the trust. I’ve been buying recently.

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.

Ben McPoland has positions in BlackRock World Mining Trust Plc, Diageo Plc, and Pacific Horizon Investment Trust Plc. The Motley Fool UK has recommended Burberry Group Plc, Diageo Plc, Finsbury Growth & Income Trust Plc, RELX, and Unilever Plc. 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.

More on Investing Articles

Bearded man writing on notepad in front of computer
Investing Articles

Could a 2025 penny share takeover boom herald big profits for investors?

When penny share owners get caught up in a takeover battle, what might happen? Christopher Ruane looks at some potential…

Read more »

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.
Investing Articles

3 value shares for investors to consider buying in 2025

Some value shares blew the roof off during 2024, so here are three promising candidates for investors to consider next…

Read more »

Investing Articles

Can this takeover news give Aviva shares the boost we’ve been waiting for?

Aviva shares barely move as news of the agreed takeover of Direct Line emerges. Shareholders might not see it as…

Read more »

Investing Articles

2 cheap FTSE 250 growth shares to consider in 2025!

These FTSE 250 shares have excellent long-term investment potential, says Royston Wild. Here's why he thinks they might also be…

Read more »

A pastel colored growing graph with rising rocket.
Investing Articles

Has the 2024 Scottish Mortgage share price rise gone under the radar?

The Scottish Mortgage share price rise has meant a good year for the trust so far, but not as good…

Read more »

Investing Articles

Will the easyJet share price hit £10 in 2025?

easyJet has been trading well with rising earnings, which reflects in the elevated share price, but there may be more…

Read more »

Investing Articles

2 FTSE shares I won’t touch with a bargepole in 2025

The FTSE 100 and the FTSE 250 have some quality stocks. But there are others that Stephen Wright thinks he…

Read more »

Dividend Shares

How investing £15 a day could yield £3.4k in annual passive income

Jon Smith flags up how by accumulating regular modest amounts and investing in dividend shares, an investor can build passive…

Read more »