Personal Assets Trust

Manager Sebastian Lyon’s track record of steering a course through turbulent economic times is excellent, but in the bull market of the last couple of years his cautious approach has inevitably lagged behind.

However, in the interests of building a resilient, well-rounded portfolio this sort of strategy should not be forgotten. Lyon utilises the “3 pillars” of international equities, index-linked bonds and gold but remains ready to become bullish and invest more fully in the stock market when he believes the time is right – the portfolio contains a lot of cash presently awaiting that opportunity. I believe this is a good-quality long term holding that will stand the test of time.

Standard Life Equity Income Trust

It is always good to find young, enthusiastic managers with a well-defined process and Standard Life’s Thomas Moore certainly fits the bill.

He looks for companies capable of growing their dividends at a faster pace – which often leads him to investing in mid-caps as opposed to FTSE 100 heavyweights. For instance, he has reservations concerning large pharmaceutical companies such as AstraZeneca, which he views as having unexciting earnings growth potential. No matter how large a part of the benchmark a stock is he won’t hold it unless he genuinely likes it.

Holdings such as easyJet, DS Smith and Britvic illustrate the diverse nature of his portfolio and why performance can be expected to deviate from that of the wider market. So far Moore has done an excellent job, and while it would be nice to buy the trust at a discount, it trades roughly in line with net value presently, which is still pretty good compared to a many of its equity income rivals on premiums.

The European Investment Trust

There is still plenty of scepticism about whether nascent economic recovery in Europe can be sustained. It means for more bullish investors there are opportunities to add exposure to the region at more attractive valuations than can be found across much of the developed world.

This trust managed by Edinburgh Partners has recently been added to our Foundation Fundlist of preferred investments. We like the way the team models company earnings on a five year view, a broader time horizon than the majority of the market, and illustrative of their patient, longer term approach.

Lead manager Dale Robertson pays little attention to sector, country or region, aiming solely to find the best value stocks wherever they may be. The portfolio is concentrated at between 30 to 40 stocks, meaning each makes a substantial contribution to performance. It can presently be bought at around an 8% discount to net assets.

BlackRock World Mining Trust

Investors in the mining sector have clearly had an uncomfortable ride and it remains somewhat out of favour. However, change seems to be underway, often resulting from new management.

Tighter controls on the allocation of money to new projects and paying dividends to shareholders are now priorities, and I believe this should benefit investors over time.

The managers of this trust, Evy Hambro and Catherine Raw, are both very experienced investors and are proactive in helping instigate change. The investment trust structure also allows the managers to differentiate it from competitors, for instance making some direct investments into mining projects such as the Marampa iron ore mine in Sierra Leone.

With a yield of around 4.5%, and trading on a discount to net asset value of around 3%, the trust is an interesting source of income for investors from an asset class not traditionally recognised for its yield characteristics.