Two investment trusts delivering index-trouncing returns
Most investors think of investments trusts as ideal sources of income, but there are plenty of publicly-traded closed-ended funds out there offering investors impressive capital growth as well.
One of the best in that area over the past few years has been the Allianz Technology Trust (LSE: ATT). As its name suggests, ATT invests in technology stocks with its largest holdings compromising Amazon, Microsoft and Facebook.
And although the technology sector as a whole has done well, with the benchmark Dow Jones World Technology index up 181% in the five years to June 29, ATT's managers have done even better. Over this period they've delivered shareholders a whopping 256% share price increase.
Looking ahead, there are certainly headwinds approaching for the technology sector ranging from investor unease over relatively high valuations to increased regulatory scrutiny of the sector. However, tech firms by and large are continuing to post record revenue and profit growth, which should reassure investors who remember the dotcom bubble. The fund is also well diversified with a total of 67 portfolio companies.
For UK investors, another benefit is that the trust offers exposure to international stocks that can otherwise be expensive to purchase through some retail investment platforms. As of June, a full 86% of the trust's assets were American firms with a further 5% coming from Chinese companies and the rest a smattering of European stocks.
The fund currently trades at a marginal 0.9% premium to its net asset value (NAV), so investors shouldn't worry about paying too much over the odds for the fund. All told, I think these qualities maker Allianz Technology Trust worth taking a closer look at for investors seeking to remedy the dearth of tech stocks listed on the LSE.
Offering growth and income
But if you're worried by tech valuations or overexposure to foreign equities, one option closer to home is Picton Property Income (LSE: PCTN). The fund invests in UK commercial property and over the past five years its share price has risen 123% against a 43% gain for its benchmark, the IPD UK All Property TR index.
The fund's properties are made up of 41% industrial locations, 36% offices and the rest are retail and leisure properties. And before would-be investors become too worried by this exposure to retail outlets, much of its activity in this sector is to very in-demand warehouses with only 11.4% of its total portfolio tied to high streets.
This diversified approach means it has benefited from a generally buoyant economy and has served Picton well with the company reporting a rock-bottom 4.2% vacancy rate at year-end and securing rent rises in recent years. This has flowed through to the bottom line with its NAV per share steadily rising from 77p in 2016 to 90p last year.
Earnings per share last year jumped from 3.8p per share to 4.2p, which allowed management to boost its dividend payout to 3.4p per share. This works out to a dividend yield of 3.8% at its current share price. This high dividend combined with a solid record of capital appreciation means investors bullish on the UK economy in general and property in particular may find Picton Property Income an intriguing investment trust to consider for their retirement portfolio.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's board of directors. LinkedIn is owned by Microsoft. Ian Pierce owns shares of Amazon. The Motley Fool UK owns shares of and has recommended Amazon and Facebook. 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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