These 3 global investment trusts could help you retire early
If you want an investment with pedigree, you will struggle to do better than a global investment trust. Many were launched back in Victorian times, and these behemoths continue to combine low charges with market-beating capital growth and dividend income progression. These three investment trusts will be there when you retire, and for years afterwards.
Home and away banker
Few are more venerable than the £962m Bankers Investment Trust(LSE: BNKR), founded in 1888 and now managed by Janus Henderson Investors, which published results for the half-year ended 30 April this morning. Its diversified international portfolio has delivered a total return of 120% over five years, against 100% for its global benchmark, according to Trustnet.com. The board has also increased its dividend for 50 consecutive years - that's right, 50 - and it currently yields a steady 2.2%.
Today's results show net asset value (NAV) up 7% over six months, pretty much in line with the FTSE All-Share at 7.1%, and an even more impressive 31.3% over 12 months, outpacing the All-Share's 20.1%. It has been helped by the post-Brexit plunge in the pound, which lifted the value of its global portfolio when translated into sterling.
Bankers' increased weighting to North America has helped performance, although it has been scaling back its exposure on valuation concerns and fears about the impact of US interest rate hikes on investor sentiment. It is shifting asset allocation towards continental Europe and Asia, where valuation and yields are at a relative discount.
Its European holdings grew strongly over the period, rising 9.7%, followed by China at 9.3%, impressive given that the local index fell 4.4%. Japanese and Pacific exposure floundered. The board is projecting 6% dividend growth this year, helped by its international holdings, special dividends from UK companies and the positive translation of overseas dividends into sterling. Currently, it trades at a 5.5% discount to NAV and the annual charge is just 0.45%. You can buy this trust and largely forget about it, until you need retirement income.
North of the border
The £1.8bn Caledonia Investments(LSE: CLDN) is another golden oldie, tracing its history back to the shipping empire established by Sir Charles Cayzer in 1878. Today, the Cayzer family still owns just under half of the share capital. It is up 120% over five years and 28% over 12 months, Trustnet shows, and also boasts the proud record of increasing its dividend for 50 consecutive years. Currently, the yield is 1.93% and is trading at an even wider discount of 16.81% to NAV. However, it does have a relatively high ongoing charge of 1.14%.
The £843m Scottish Investment Trust(LSE: SCIN), founded in 1887 has offered 33 years of consecutive dividend growth and currently yields 1.67%. Its five-year total return is a robust 97%, and 26% over 12 months. The trust currently trades at a discount of 8.33% to NAV, with ongoing charges of just 0.59% a year.
Bankers and Scottish have large UK and US exposures, which combined, account for roughly half of each trust's global exposure, but this falls to just 10% for Caledonia. Together these three trusts could give you all the diversification you need.
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Harvey Jones has no position in any shares 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.