Investment Trust Awards 2018: top managers & Best Board!

We reveal the 18 investment trusts and companies that scooped Citywire’s performance and Best Board awards this year.

Awards bonanza

Seventeen performance awards and one ‘Best Board’ trophy were up for grabs at last week’s prize-giving.

The performance awards went to trusts whose fund managers had added the most value by delivering superior risk-adjusted three-year returns on their portfolios compared to their stock market index benchmarks. 

The Best Board award went to the investment trust whose board of non-executive directors were judged to have done a great job on behalf of their shareholders in recent years.

Next: who beat Scottish Mortgage? 

Awards bonanza

Seventeen performance awards and one ‘Best Board’ trophy were up for grabs at last week’s prize-giving.

The performance awards went to trusts whose fund managers had added the most value by delivering superior risk-adjusted three-year returns on their portfolios compared to their stock market index benchmarks. 

The Best Board award went to the investment trust whose board of non-executive directors were judged to have done a great job on behalf of their shareholders in recent years.

Next: who beat Scottish Mortgage? 

Manchester & London beats Scottish Mortgage!

Independently run Manchester & London (MNL) delivered an upset in the competitive Global Equities sector where it beat the giant and frequently top-performing Scottish Mortgage Trust (SMT).

This is an intriguing result because £113 million MNL is a mini-SMT, holding big positions in many of the high-growth companies like Amazon and Alibaba that managers of the £7 billion Scottish Mortgage portfolio admire, including a position in Scottish Mortgage itself. It doesn’t, however, invest in the unquoted stocks that have contributed to the success of the FTSE 100-listed SMT.

Our table below shows Manchester & London achieved a higher ‘information ratio’ (middle column) from its three-year growth in net asset value (NAV) at 31 August. This ratio measures risk-adjusted returns with MNL scoring 1.2 ahead of SMT’s 1.05. Although its NAV total return was less than SMT’s, MNL had a higher score because its returns were a bit smoother and less volatile. Its total return to shareholders (right hand column) was also better.

Citywire’s Gavin Lumsden presented the award to Richard Morgan of Manchester & London’s investment manager M&L Capital Management.

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Manchester & London (MNL) 119.08 1.20 MSCI All Countries World (total return, US$) 139.58
2 Scottish Mortgage (SMT) 128.21 1.05 MSCI All Countries World (total return, US$) 131.04
3 British Empire (BTEM) 67.77 0.92 MSCI Europe, Australasia and Far East (EAFE - total returns, US$) 72.35
4 Monks (MNKS) 92.20 0.78 MSCI All Countries World (total return, US$) 115.58
5 Edinburgh Worldwide (EWI) 110.84 0.62 MSCI World Small Cap (total return, US$) 127.33

Source: Lipper, Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Next: the winner in Japanese Equities 

Baillie Gifford wins in Japan

Any disappointment felt by Baillie Gifford at its flagship being pipped to the post in the Global sector was mollified by its clear victory in Japanese Equities. For the second year, Baillie Gifford Japan (BGFD)  romped home with an information ratio of 1.31 compared to 0.48 by its nearest rival JPMorgan Japanese (JFJ).

The £715 million trust also beat stable mate Baillie Gifford Shin Nippon (BGS). Although the Japanese smaller companies trust generated higher growth in net asset value, it scored a lower 0.42 because its performance was judged against a different index: the Tokyo Stock Exchange Second Section rather than the country’s mainstream Topix index.

Baillie Gifford sales manager Thomas Patchett collected the award on behalf of Praveen Kumar who took over the portfolio when Sarah Whiteley, its founding star manager, retired earlier this year.

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Baillie Gifford Japan (BGFD) 93.72 1.31 Topix (total return) 92.24
2 JPMorgan Japanese (JFJ) 74.44 0.48 Topix (total return) 73.94
3 Baillie Gifford Shin Nippon (BGS) 144.84 0.43 Tokyo SE 2nd Section (total return) 154.46

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Next: who’s terrific in Asia Pacific?

 

Pacific Horizon triumphs in Asia

Thomas Patchett was swiftly back on stage, collecting an award for Baillie Gifford fund managers Ewan Markson-Brown and Roderick Snell after Pacific Horizon (PHI) took the crown in Asia Pacific Equities from last year’s winner JPMorgan Asian (JAI).

While Pacific Horizon has easily generated the best shareholder returns over three years, in terms of the underlying risk-adjusted growth in net asset value, it was a much closer contest with just 0.1 separating the information ratios of the top three trusts.

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Pacific Horizon (PHI) 97.43 0.64 MSCI All Countries Asia ex-Japan (total return, US$) 120.60
2 JPMorgan Asian (JAI) 89.03 0.57 MSCI All Countries Asia ex-Japan (total return, US$) 89.37
3 Schroder AsiaPacific (SDP) 83.75 0.54 MSCI All Countries Asia ex-Japan (total return, US$) 83.90
4 Schroder Asian Total Return (ATR) 85.11 0.30 MSCI All Countries Asia ex-Japan (total return, US$) 109.11
5 Invesco Asia (IAT) 77.98 0.26 MSCI All Countries Asia ex-Japan (total return, US$) 74.73

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Next: International Income

 

Scottish American tops International Income

Global equity income funds have had a hard time as markets have fretted about the impact of rising interest rates on dividend-paying stocks. That can be seen in the fact both our short-listed trusts had slightly negative information ratios although their three-year returns on net assets and for shareholders were very positive.

Baillie Gifford’s Scottish American (SCAM) – a £508 million trust that pays quarterly dividends and yields 3% - narrowly beat off a strong challenge from JPMorgan Global Growth & Income (JPGI).

Thomas Patchett returned for the third – and last time! – to collect the award on behalf of fund managers James Dow and Toby Ross.

Next: surprise winner in Europe

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Scottish American (SCAM) 67.82 -0.04 MSCI All Countries  World (total return, US$) 73.29
2 JPMorgan Global Growth & Income (JPGI) 65.89 -0.07 MSCI All Countries World (total return, US$) 80.37

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Fidelity proves its value in Europe

Our approach of judging investment trusts’ performance by the information ratio of their fund managers yielded another surprise in Europe. Alex Darwall’s Jupiter European Opportunities (JEO) regularly tops the performance tables and indeed his three-year returns of around 69% are very good. But in terms of risk-adjusted returns, this arch stock picker is overshadowed by the less volatile performance of Fidelity European Values (FEV) under Sam Morse which scored 0.72 versus JEO’s 0.63.

Alex Denny, head of investment trusts at Fidelity International, collected the award on behalf of Morse who has run the £886 million trust for nearly eight years.

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Fidelity European Values (FEV) 57.60 0.72 MSCI Europe ex-UK (total return, €) 46.03
2 Montanaro European Smaller Companies (MTE) 97.17 0.64 MSCI Europe ex-UK Small Cap (total return, US$) 95.58
3 Henderson Eurotrust (HNE) 56.07 0.63 MSCI Europe ex-UK (total return, €) 43.04
4 Jupiter European Opportunities (JEO) 69.79 0.62 MSCI Europe ex-UK (total return, €) 69.53

Source: Lipper, Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Next: Emerging Market Single Country

 

Fidelity China clinches victory

It’s been a tough year for emerging markets but fund manager Dale Nicholls’ three-year record proves he has been a worthy successor to Anthony Bolton on Fidelity China Special Situations (FCSS).

It beat its closest rival JPMorgan Chinese (JMC) and three India, Russian and Vietnam trusts with an 88.6% total return on net assets and information ratio of 0.34.

Alex Denny of Fidelity returned to collect the award for Nicholls.

Next: who did the double in North America?

 

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Fidelity China Special Situations (FCSS) 86.63 0.34 MSCI China (total return, US$) 92.07
2 Aberdeen New India (ANII) 65.24 0.24 MSCI India (total return US$) 54.99
3 JPMorgan Russian (JRS) 95.83 0.24 MSCI Russia (total return) 95.12
4 VinaCapital Vietnam Opportunity (VOF) 111.17 0.12 Vietnam Index 130.06
5 JPMorgan Chinese (JMC) 73.98 0.05 MSCI China (total return, US$) 75.97

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

JPMorgan US Smaller does the double

North America Equities is a notoriously hard environment for active fund managers to beat the stock market indices. That said, we short-listed three trusts this year with respectable information ratios, two more than last year.

The arrival of some competition, however, was not enough to dislodge last year’s winner JPMorgan US Smaller Companies (JUSC) which under Don San Jose has continued to generate superb three-year returns.

Davina Walter, the investment trust’s chairman and a former  US fund manager, was present to accept the award on San Jose’s behalf.

Next: which BlackRock trust wins UK Smaller Companies?

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 JPMorgan US Smaller Companies (JUSC) 92.97 0.32 Russell 2000 (total return) 98.24
2 North American Income (NAIT) 90.44 0.21 S&P 500 (total return) 94.95
3 JPMorgan American (JAM) 87.90 0.19 S&P 500 (total return) 82.93

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

BlackRock Throgmorton takes smaller companies crown

UK Smaller Companies is home to several star fund managers but eclipsing them all on the night was BlackRock Throgmorton (THRG), which has recently taken steps to distinguish itself from its highly competitive stable mate managed by Mike Prentis.

Yvonne Blake, vice-president of investment trust marketing at Blackrock, accepted the award on behalf of fund manager Dan Whitestone.

Next: Global Emerging Markets

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 BlackRock Throgmorton (THRG) 69.54 1.49 Numis Smaller Companies (ex-investment trusts, total return) 73.16
2 BlackRock Smaller Companies (BRSC) 62.25 1.30 Numis Smaller Companies (ex-investment trusts, total return) 69.96
3 Standard Life UK Smaller Companies (SLS) 68.49 1.27 Numis Smaller Companies (ex-investment trusts, total return) 65.85
4 Invesco Perpetual UK Smaller Companies (IPU) 51.69 1.27 Numis Smaller Companies (ex-investment trusts, total return) 56.56
5 Rights & Issues (RIII) 75.54 0.96 Numis Smaller Companies (ex-investment trusts, total return) 130.24

Source: Lipper, Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

 

BlackRock still in front of emerging markets

Having excluded Templeton Emerging Markets (TEM) after the unexpected departure of fund manager Carlos Hardenberg this year, just two trusts were vying for the top spot in Global Emerging Markets.

Last year’s winner BlackRock Frontiers (BRFI) scooped the award. Despite a difficult year its three-year growth in net asset value (NAV) continues to give it the edge in its information ratio over its MSCI Frontier Markets index.

BlackRock’s Yvonne Blake returned to collect the award on behalf of fund managers Sam Vecht and Emily Fletcher.

Next: UK All Companies

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 BlackRock Frontiers (BRFI) 43.34 0.24 MSCI Frontier Markets (total return US$) 56.12
2 JPMorgan Emerging Markets (JMG) 68.40 0.14 MSCI Emerging Markets (total return, US$) 67.87

Source: Lipper, Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Deflated Independent still number one

This has been a tough year for shareholders in Independent (IIT), last year’s UK All Companies sector winner, with the share price’s 20% premium unwinding and the three-month slide in smaller growth and technology stocks denting the portfolio run by Max Ward since 2000.

There’s no denying the numbers though. In the three years to the end of August fund manager Ward doubled net asset value and achieved a far higher information ratio or risk-adjusted return than his nearest rivals.

Ward was unable to attend the presentation but Simon Elliott, head of investment trust research at Winterflood Securities, collected the award on his behalf.

Next: can Nick Train be de-railed in UK Equity Income?

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Independent (IIT) 99.89 0.86 FTSE All-Share TR 107.02
2 Fidelity Special Values (FSV) 41.06 0.26 FTSE All-Share TR 47.74
3 Aurora (ARR) 37.64 0.11 FTSE All-Share TR 47.57
4 Henderson Opportunities (HOT) 32.70 0.03 FTSE All-Share TR 14.19

Source: Lipper, Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

 

Finsbury Growth holds on to UK Equity Income gong

No, is the short answer to the question on the previous page.

While it’s been a difficult year for most UK Equity Income investment trusts, over three years there’s one that stands head and shoulders above the rest.

That is last year’s winner Finsbury Growth & Income Trust (FGT) managed by Nick Train who attained an impressive 1.11 information ratio with his low-turnover portfolio.

Will Hampsey-Cook of Frostrow Capital accepted the award on behalf of Train.

Next: Property trust tops specialist equities

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Finsbury Growth & Income (FGT) 61.08 1.11 FTSE All-Share (total return) 60.50
2 F&C Capital & Income (FCI) 44.42 0.67 FTSE All-Share (total return) 42.77
3 JPMorgan Claverhouse (JCH) 36.38 0.23 FTSE All-Share (total return) 40.74
4 Murray Income (MUT) 34.47 0.06 FTSE All-Share (total return) 27.84

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

 

TR Property tops Specialist Equities

TR Property (TRY) burst the bubble of three technology trusts and Impax Environmental Markets (IEM) to win the prize in our eclectic Specialist Equities category.

The £1.2 billion investment trust invests mostly in the shares of real estate developers although it does hold a small amount of physical commercial property. Under Thames River Capital’s Marcus Phayre-Mudge the pan-European fund has consistently added value against its real estate benchmark and yields 3%.

Alex Howe, sales director at BMO Global Asset Management, which owns Thames River, collected the award on behalf of Phayre-Mudge.

Next: who’s secure in Property Specialist?

 

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 TR Property (TRY) 49.95 0.78 MSCI Europe/Real Estate (total return) 49.25
2 Impax Environmental (IEM) 81.59 0.61 FTSE Environmental Opportunities All Shares 97.96
3 Allianz Technology (ATT) 160.99 0.60 MSCI World/Information Technology (total return, US$) 176.27
4 Polar Capital Technology (PCT) 148.82 0.47 MSCI World/Information Technology (total return, US$) 144.11
5 Herald (HRI) 85.30 0.28 FTSE UK/Technology (total return) 95.94

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

Secure Income seals Property Specialist

Moving away from publicly-traded equities, we come to the first of three categories where we dispensed with the information ratio approach and simply awarded trusts with the best total returns on net assets (middle column in table) over three years.

Property Specialist covers a range of real estate investment trusts (Reit) seeking to generate capital growth and good yields from specific areas of the property market.

Secure Income (SIR), a 3.7% yielding leisure Reit managed by property tycoon Nick Leslau’s Prestbury Investments, won the day. Ben Walford, partner, at Prestbury Investments, collected the award on behalf of the team.

Next: UK Property

Rank Trust Three-year net asset value (NAV) total return % Three-year total shareholder return % Numis sector
1 Secure Income Reit (SIR) 49.91 65.60 Property - UK Long Leases
2 MedicX Fund (MXF) 47.21 23.23 Property Specialist - Healthcare
3 Primary Health Properties (PHP) 46.37 28.34 Property Specialist - Healthcare
4 Tritax Big Box Reit (BBOX) 42.27 46.03 Property - UK Long Leases
5 GCP Student Living (DIGS) 34.73 29.89 Property Specialist - Student

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year NAV growth to 31/8/18. All trusts with less than three years performance history were excluded.

Picton keeps top place in UK Property

For our award for UK real estate investment trusts investing in direct, physical property we reverted to information ratios in our analysis. There is no denying the commanding lead here in our table of Picton Property Income (PCTN) with a ratio of 1.75.

This is the second year the 4% yielding investor in offices and industrial properties has won the award which was collected by investment director Fraser D’Arcy.

Next: the giant of private equity

Rank Trust Three-year net asset value (NAV) total return % NAV information ratio Index used Three-year total shareholder return %
1 Picton Property Income (PCTN) 49.99 1.75 Jones Lang LaSalle UK Property (total return) 44.73
2 Standard Life Investment Property Income (SLI) 38.58 0.67 Jones Lang LaSalle UK Property (total return) 32.85
3 Schroder Real Estate (SREI) 28.54 0.14 Jones Lang LaSalle UK Property (total return) 25.83

Source: Lipper and Micropal data. Numis Securities sectors. Trusts ranked by their three-year information ratio based on NAV total return to 31/8/18. All trusts with less than three years performance history were excluded.

3i bosses private equity

3i Group (III), the biggest investment trust in the Private Equity – Direct sector, was too mighty for the competition, for the second year running its superior three-year return on net assets from investing in private, unlisted companies was way ahead of the opposition.

Shany Salem, 3i analyst, collected the award.

Next: Infrastructure’s new winner

Rank Trust Three-year net asset value (NAV) total return % Three-year total shareholder return % Numis sector
1 3i Group (III) 127.6 102.81 Private Equity - Direct
2 Princess Private Equity (PEY) 78.65 99 Private Equity - Direct
3 HgCapital Trust (HGT) 75.15 95.86 Private Equity - Direct
4 HarbourVest Global Private Equity (HVPE) 58.36 59.44 Private Equity - Fund of Funds
5 Pantheon International (PIN) 55.47 64.57 Private Equity - Fund of Funds

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year NAV growth to 31/8/18. All trusts with less than three years performance history were excluded.

 

 

BBGI bags infrastructure

Superior three-year growth in net asset value saw BBGI (BBGI) overtake last year’s winner 3i Infrastructure (3IN).  

Ian Tayler, a director of the Luxembourg, but London-listed company, which offers a yield of 4.4%, collected the award.

Next: the kings of specialist debt

Rank Trust Three-year net asset value (NAV) total return % Three-year total shareholder return % Numis sector
1 BBGI (BBGI) 45.82 39.75 Infrastructure - PPP / Core
2 3i Infrastructure (3IN) 38.95 61.06 Infrastructure - PPP / Core
3 Bluefield Solar Income (BSIF) 32.64 37.71 Infrastructure - Renewables

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year NAV growth to 31/8/18. All trusts with less than three years performance history were excluded.

 

Fair Oaks: kings of debt 

Debt has been a huge growth area for investment trusts and closed-end funds in the past five years. Our shortlist underlines the variety of income-producing loans in which companies can specialise.

Fair Oaks Income (FAIR), our winner for the second year running, invests in highly geared bundles of corporate loans known as collateralised loan obligations (CLOs) that enable the £310 million Guernsey-based fund to offer an extraordinary 15% dividend yield to shareholders.

Chloe Wong, head of investor relations at Fair Oaks Capital, collected the award on behalf of fund managers Roger Coyle and Miguel Ramos Fuentenebro.

Next: Best Board of the Year

Rank Trust Three-year net asset value (NAV) total return % Three-year total shareholder return % Numis sector
1 Fair Oaks Income (FAIR) 69.28 61.05 Collateralised Loan Obligations (CLOs) 
2 Chenavari Toro Income (TORO) 53.59 24.52 Asset Backed / Secured Loans
3 Invesco Perpetual Enhanced Income (IPE) 29.01 23.85 Diversified Debt
4 GCP Infrastructure Investments (GCP) 27.65 25.19 Infrastructure Debt
5 NB Distressed Debt - Global (NBDD) 27.09 29.78 Distressed Debt
6 Real Estate Credit Investments (RECI) 22.02 19.05 Real Estate Debt

Source: Lipper and Morningstar data. Numis Securities sectors. Trusts ranked by their three-year NAV growth to 31/8/18. All trusts with less than three years performance history were excluded.

 

 

Best Board: Schroder Asian Total Return

It was second time lucky for the board of Schroder Asian Total Return (ATR), which was shortlisted – but did not win – last year’s Best Board award. By a narrow margin, the £290 million investment trust beat Syncona (SYNC) and two other trusts when our judges voted on this year’s four-strong shortlist.

The award to the six-strong board of independent non-executive directors, chaired by David Brief, follows a period of improved shareholder returns after fund manager Henderson was dropped and the portfolio switched to Schroders, whose managers Robin Parbrook and King Fuei Lee have run the listed fund since March 2013.

Consistent marketing and use of share buybacks and issuance helped to re-rate the stock which until recently traded at a modest 2% premium over net asset value. The judges were also pleased to see five of the directors had ‘skin in the game’ and owned shares: two with substantial holdings, two equal to their annual fee and one less, according to a study by Canaccord Genuity.

James Lowe, investment trust business development manager at Schroders, collected the award on behalf of the board.

Next: the judges

Thankyou judges!

Many thanks again to our four judges for their time and effort in overseeing this year’s awards.

They are (left to right): Charles Cade, head of investment companies research at Numis Securities; Genevra Banszky von Ambroz, fund manager and partner at Smith & Williamson; John Newlands, founder of Newlands Fund Research; and John Spiers, founder and chief executive of EQ Investors.

Next: Congratulations!

Congratuations!

Hearty congratulations to all our winners. 

The awards were presented at the Swan, Shakespeare's Globe, on the south bank of the Tames overlooking the City of London.

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