2 dirt-cheap investment trusts that could make you a millionaire

The outlook for the UK and European economies is highly uncertain at the present time. Brexit may appear to be a potential problem for the UK which has hurt economic growth and business confidence in recent months. However, it could also create challenges for Europe, since the UK is the region's main trading partner.

As such, there could be further volatility in share prices for stocks trading on both sides of the Channel. Despite this, volatility and uncertainty in the short term could prove to be long term investment opportunities, as wider margins of safety may mean risk/reward ratios are more favourable at the present time. With that in mind, here are two investment trusts which could be worth a closer look right now.

Strong performance

Reporting on Friday was Strategic Equity Capital(LSE: SEC). It has enjoyed a strong performance in its most recent financial year, with its net asset value increasing by over 29%. This is ahead of its benchmark index by around 1%, and further outperformance could be ahead.

With all of its invested assets in UK-listed stocks, the company may lack the geographical diversification offered by other investment trusts at an asset allocation level. However at a company level, it offers some geographical diversity, although since it focuses on smaller companies this may be relatively limited.

That said, Strategic Equity Capital appears to offer upside potential. Its share price continues to trade at a discount to net asset value, with the discount being around 15% at the present time. Furthermore, the outlook for the UK economy may create investment opportunities over the medium term. Wider margins of safety may be on offer, and this could create a buyer's market where risks are lower and potential returns are higher.

Diverse offering

While all of Strategic Equity Capital's holdings may be UK-listed stocks, TR European Growth Trust(LSE: TRG) has a range of companies from across Europe in its portfolio. It is most exposed to German equities, with over 19% of its holdings listed in Europe's largest economy. Beyond this, it has a mix of exposure to other leading European economies including France and Italy. This provides it with a high degree of diversity within Europe which could help to lower its overall risk profile.

With the company having outperformed its benchmark by around 111% in the last five years, it has an excellent track record of growth. Its top 10 holdings make up around 15% of the total portfolio. This suggests it is highly diversified even at a company level, and may be a sound means for an investor to gain access to a wide range of European stocks in a number of different countries.

Certainly, a tapering of QE next year by the ECB could lead to pressure on the region's growth rate. But with international diversification and a strong track record of growth, TR European Growth could help its investors to generate a seven-figure portfolio in the long run.

Millionaire potential

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Peter Stephens has no position in any company 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.

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