Latest news with #investmenttrusts
Reuters
5 days ago
- Business
- Reuters
India markets regulator proposes several changes to mutual fund rules
July 18 (Reuters) - India's markets regulator on Friday proposed a series of changes to mutual fund scheme rules, including allowing asset managers to offer both value and contra funds under certain conditions. The Securities and Exchange Board of India, in a consultation paper published on its website, suggested permitting mutual funds to offer both value and contra funds provided the overlap in their investment portfolios does not exceed 50%. Value funds typically invest in undervalued companies, while contra funds invest against prevailing market trends. Under current regulations, asset managers are allowed to launch only one of these two. India's mutual fund industry hit a new record in June, with net assets under management climbing to nearly 75 trillion rupees ($870.95 billion). SEBI on Friday also sought feedback on whether mutual funds should invest the residual portion of their equity scheme funds in a diversified mix of assets such as debt, gold, silver and real estate investment trusts. Equity schemes must invest a minimum 65% of their funds in equity-related instruments, and the rest can be parked in debt or money market instruments. The regulator sought feedback on whether mutual funds should be permitted to invest the residual portion of debt scheme funds in real estate investment trusts and infrastructure investment trusts, except for schemes with short durations. SEBI has sought comments by August 8. ($1 = 86.1130 Indian rupees)
Daily Mail
30-06-2025
- Business
- Daily Mail
SMALL CAP IDEA: Nine of the best unloved UK small cap funds
While the FTSE 100 has been busy setting new records this year, one corner of the UK market has remained stubbornly unloved: smaller company investment trusts. The average discount that shares of UK smaller company trusts shares trade at compared to the value of the net assets in their investment portfolios is 12 per cent, according to data from the Association of Investment Companies (AIC). Despite a swarm of hungry private equity buyers and deep-pocketed multinationals gobbling up dozens of UK companies over the past couple of years, that gap hasn't closed. In fact, over the last year, the average discount has widened by about one percentage point. By contrast, similar sectors such as the wider UK all-companies, Europe and even European smaller companies have seen discounts narrow by between one and over three percentage points. However, this discrepancy is variable, while many UK small trusts possessing highly attractive growth records over the medium- and long-term, and many offering tempting dividend yields on top. Before highlighting 10 standout funds, it's worth first considering how investment trusts work, what's been driving the current dislocation in valuations, and what might prompt a shift in sentiment. What, who, why? A quick brush up on investment trusts for the uninitiated or those whose knowledge might have got a bit rusty. A key feature of what are now often called investment companies is that they are closed-ended funds that are listed on the London stock market. This means they have a fixed number of shares in issue, and these can be bought and sold, like any other company or exchange-traded fund, so their share price can go up and down. Investment trusts are actively managed funds, with each set of fund managers making their pick of which companies they think are most likely to grow fastest or looking most undervalued. UK smaller company trusts invest pretty much only in equities listed in the UK valued at below £2billion. Companies with lower market capitalisations can offer good growth potential, though they tend to be more volatile and less liquid than larger counterparts. This lack of liquidity is part of why trusts investing in small caps might trade at discounts, though each trust's net asset value (NAV) is 'marked to market' daily. In other words, the share prices of all its investments are totted up at the end of each London trading session. Those justifying the discounts might point to the impact of management fees and how trusts were managed, though most UK smaller companies trusts have performed well in the long-term on a NAV basis. Scope for returns 'While we've heard a lot about money flowing back into European and UK stock markets given investors' concerns about the US, the UK smaller company sector is clearly not at the front of the queue for these flows,' says Nick Britton, research director at the AIC. He agrees that the sector discount remains 'wide' and that there are long-established, well-regarded trusts trading at double-digit discounts and only a handful bucking the trend. 'This offers considerable scope for strong returns if discounts should narrow, following the trends we are seeing in other equity sectors,' he says. 'Of course, nothing is guaranteed and investors in this sector need to be in it for the long term.' The value on offer from UK small cap investment trusts has been flagged by others too. Research from fund manager Aberdeen showed that earlier this year the forward price-to-earnings ratio – a measure that investors use to value companies based on their expected performance in the coming year – for the MSCI UK Small Cap Index was 24.3 per cent below its 10-year average January. That's the steepest valuation discount among all major global regions. According to Abby Glennie, co-manager of the Abrdn UK Smaller Companies Fund, this reflects negative sentiment in the sector. However, she said this is starting to be dispelled, as many UK small caps are delivering strong earnings growth, outperforming larger global peers. Other structural factors are also at play, it is fair to say, with the number of active UK small-cap funds is at its lowest since 1997, reducing investor coverage and contributing to inefficiencies in pricing. Glennie and Britton are not the only ones seeing potential for recovery. Falling inflation and anticipated interest rate cuts should benefit smaller, more leveraged firms. Acquisition activity is also increasing, with expectations that a significant share of UK small and mid-caps could be acquired in the coming year, following 73 UK companies being taken over by foreign companies in 2024 and an increased value of £19.2billion of takeovers in the first quarter of 2025. Looking ahead, initiatives such as the Mansion House Accord, which aims to channel £25billion into UK-listed firms including small and AIM-listed companies by 2030, could support sentiment and capital flows into the sector. Nine of the best UK small cap funds This list includes the top performing small cap trusts over one-year, five-year and 10-year share price total return categories. Rockwood Strategic is top or near on many of the categories, with manager Richard Staveley taking a value-orientated investment focus. Top investments at its last update were RM, the provider of IT to the education sector; tech component maker Filtronic; fastenings specialist Trifast; and sub-prime lender Vanquis. Another with a strong record of late is Crystal Amber, an activist fund that targets undervalued companies, aiming to improve their value through engagement and strategic changes. A boost to its NAV was driven largely by its activism at De La Rue, where the sale of a division led to a boost in returns. Aberforth Smaller Companies' top holdings show a mix of UK small and mid caps, including information and training publisher Wilmington, ready meal supplier Bakkavor, casino owner Rank and construction group Galliford Try. Marwyn Value Investors is another with a slightly different approach. It takes an almost private equity style approach with a small and tighter portfolio of listed companies, backing management teams to generally go on acquisitive growth strategies. Its top four investments account for over 90 per cent of its portfolio. Performance of smaller company investment trusts Rockwood Strategic – share price total return of 7.94 per cent over 1yr, 224.36 per cent over 5yrs, 396.96 per cent over 10yrs, shares at premium of 3.16 per cent Crystal Amber Fund – share price total return of 56.4 per cent over 1yr, 180.93 per cent over 5yrs, 86.34 per cent over 5yrs, shares at discount of 27.3 per cent Aberforth Smaller Companies – 6.17 per cent over 1yrs, 95.1 per cent over 5yrs, 74.45% over 10yrs, discount 10.99 per cent Marwyn Value Investors – 32.2 per cent over 1yr, 67.92 per cent over 5yrs, -12.59 per cent over 10yrs, discount 49.15 per cent Abrdn UK Smaller Companies Growth – 11.15 per cent over 1yr, 17.45 per cent over 5yrs, 107.25 per cent over 10yrs, discount 8.58 per cent JPMorgan UK Small Cap Growth & Income – 9.71 per cent over 1yr, 79.04 per cent over 5yrs, 161.15 per cent over 10yrs, discount 7.29 per cent Strategic Equity Capital – 1.36 per cent over 1yr, 91.14 per cent over 5yrs, 66.29 per cent over 10yrs, discount of 8.84 per cent Oryx International Growth – -1.8 per cent over 1yrs, 44.41 per cent over 5yrs, 138.35 per cent over 10yrs, discount of 30.53 per cent Odyssean Investment Trust – -6.40 per cent over 1yr, 67.27 per cent over 5yrs, no 10yr record yet, discount of 1.7 per cent
Yahoo
29-06-2025
- Business
- Yahoo
£10k to invest? 3 investment trusts to target a £1,410 second income this year
Dividends can never be guaranteed, and especially during economic downturns. UK shares are typically known as good shares to buy for investors targeting a second income. But British companies aren't immune to the profits problems that can impact shareholder payouts. Purchasing dividend-focused investment trusts can be a great way to reduce (if not completely eliminate) these threats. These financial vehicles often hold stakes in a variety of companies. So problems felt by a handful of companies doesn't necessarily mean that investors' dividend income collapses. With this in mind, here are three top trusts I think could be great sources of long-term passive income. If broker forecasts are correct, a £15,000 lump sum spread equally among them will yield a £1,410 second income this year alone. Economic bumpiness in China has been a problem for Henderson Far East Income (LSE:HFEL) recently. Trouble in its core market (and contagion to nearby economies) has caused its share price to drop. This has, in turn, supercharged its dividend yield. While risks remain, I think this emerging market trust could deliver great long-term returns. I certainly expect it to continue raising dividends for the foreseeable future (annual rewards have risen every year since 2008). This Henderson trust holds stakes in around 70 companies. These range across sectors and include Alibaba, Taiwan Semiconductor Manufacturing Co and China CITIC Bank. I think it's worth considering as way to capitalise on soaring Asian wealth and population levels. As its name implies, the Chelverton UK Dividend Trust (LSE:SDV) is focused on generating returns from London-listed shares. This leaves it more vulnerable to nation-specific risks than continental or investment trusts. But with more than 60 holdings, and a focus on mid-to-small-cap companies, it still offers a diversified approach that can provide long-term payout growth. Dividends here have risen consistently for the past 14 years. Like Henderson Far East Income, Chelverton's capital is spread across a wide spectrum of sectors. Industrial goods and services, financial services, and construction are especially well represented through shares like Smiths News, Duke Royalty, and Severfield. Small-cap shares like this can be more volatile than blue-chip stocks, which is a risk to consider. However, they can also have superior growth potential over time. As a real estate investment trust (REIT), this particular vehicle's set up in a way that prioritises dividends income. Sector rules mean that 90% of rental earnings must be paid out each year. This doesn't always guarantee a reliable passive income. But Social Housing REIT (LSE:SOHO) focuses on the stable supported housing sector, which provides a cushion of safety. Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Unlike those other two trusts, this one doesn't invest in equities. Instead, it holds a portfolio of almost 500 residential properties comprising around 3,500 homes. This helps protect group earnings from problems (such as rent collection or cost issues) at one or two locations. Despite interest rate risks, I think this property trust is worth serious consideration for dividends. The post £10k to invest? 3 investment trusts to target a £1,410 second income this year appeared first on The Motley Fool UK. More reading 5 Stocks For Trying To Build Wealth After 50 One Top Growth Stock from the Motley Fool Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Taiwan Semiconductor Manufacturing. 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. Motley Fool UK 2025 Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Daily Mail
26-06-2025
- Business
- Daily Mail
Don't write off US stocks yet, says the INVESTING ANALYST - here's why
The US stock market remains home to world-class companies, and investment trusts offer various ways to invest in these shares across the pond. In this column, Jean-Baptiste Andrieux, Investment trust research analyst at Kepler Partners, explains why investment trusts provide compelling ways to get exposure to the US stock market. Every time a football World Cup kicks off, Brazil is always among the favourites. It doesn't matter how strong the current squad is or how they've played lately - their record of five World Cup wins, more than any other country, automatically puts them among the top contenders. In the world of stock markets, US shares arguably enjoy a similar reputation, as they have historically outperformed other major markets over many calendar years - for example, in the five calendar years since 2016. This year, however, might feel a bit like Brazil's shock 7-1 defeat to Germany on home turf in 2014. The S&P 500, America's main stock index, is in negative territory (in GBP terms) year-to-date, while European and UK markets have delivered double-digit gains. While US exceptionalism may have lost some of its shine, it is worth remembering that the US stock market remains home to many world-leading companies across a broad range of industries, often without peers elsewhere. To name just a few, think of Nvidia in the design of graphic processing units (GPU), Microsoft in enterprise software and cloud computing, or Visa and Mastercard in global payments. The US also has a strong track record of producing companies at the forefront of innovation, as seen with Moderna's development of mRNA vaccines during the Covid pandemic or Palantir's leadership in real-time data analytics. Finally, the US market includes a wide range of less high-profile, domestically focused businesses that cater to the world's largest consumer economy. While the market is now paying more attention to issues like potential tariff-driven inflation and rising public debt, many strengths of the US economy remain intact. For example, the International Monetary Fund still forecasts the US economy to grow faster than other developed markets, employment has stayed steady, real wages have grown moderately, and consumer confidence is starting to recover from the post-'Liberation Day' slump. Selectivity could matter more A common way to gain exposure to US stocks is through a tracker fund. However, there's arguably a case for a more nuanced approach going forward. One reason is the high concentration in the S&P 500: the top 10 companies by market capitalisation now make up over 35 per cent of the index. Moreover, the information technology sector accounts for more than 30 per cent of the S&P 500 - more than twice the weight of financials, the second-largest sector. This means a passive fund may not provide the level of diversification investors might expect. Another reason is the elevated valuations of US stocks, i.e. the price investors are paying relative to company earnings and future growth expectations. High valuations may not pose a hurdle if companies deliver sufficient earnings growth but can prove punitive if they fall short. In this environment, an active manager may help separate the wheat from the chaff - and investment trusts offer different avenues to do this. Take BlackRock American Income (BRAI), for example. This trust focuses on the value factor - stocks the market may be underappreciating and that therefore trade on lower multiples - while also aiming to deliver an attractive income. It's arguably a less typical way to invest in the US stock market and could prove useful at a time when the market looks expensive. BRAI might also act as a counterbalance to growth-focused strategies or a standard S&P 500 tracker, which are more commonly found in many investors' portfolios. Earlier this year, the trust adopted a new strategy called Systematic Active Equity, which combines big data, computing power, and human expertise. The aim is to beat its benchmark by one to two per cent a year - something that could translate into meaningful outperformance over time if successful. BRAI also now aims to deliver an enhanced dividend. As such, this trust offers an unusual way to access the US stock market, which isn't typically a hunting ground for income seekers, as the S&P 500 tends to offer low dividend yields. BRAI, therefore, may provide a compelling option for dividend-focused investors to gain exposure to the US stock market. Alternatively, JPMorgan American (JAM) could be an appealing choice for investors who do not want to go all-in on either value or growth - with the latter referring to stocks the market assigns higher valuations to, due to strong earnings and expected future expansion. The trust combines the best ideas from both value and growth managers within a single strategy, with the flexibility to shift the portfolio depending on the market outlook. One example of a growth stock in the portfolio is Nvidia, which has been at the forefront of the AI boom. It is by far the dominant player in the GPU market - a critical technology for powering AI models, machine learning, and data centres. On the value side, the trust holds Kinder Morgan, which owns and operates pipelines and earns revenue from the flow of oil and gas through its terminals - a system somewhat similar to collecting tolls - generating steady, recurring income. Interestingly, Kinder Morgan could also emerge as a less-well-identified beneficiary of the AI boom, as rising electricity demand from data centres may lead to greater need for natural gas. This balanced approach has paid off over the past five years (to 11/06/2025), with JAM delivering 1.3 times the return of the S&P 500 Index on both a NAV and share price total return basis - a remarkable feat, given how difficult it is to outperform that index. It's also worth noting that JAM has a modest allocation to smaller companies, resulting in a comprehensive exposure to the US stock market. Finally, JAM benefits from a strict discount control policy, with the board committed to buying back shares when they trade at 'anything more than a small discount to NAV.' As such, JAM has traded at an average discount of around three per cent over the past five years - a narrow level. This may give investors some confidence that a wide discount is not very likely to develop. The case for smaller companies For more adventurous investors, US small-caps may be worth a second look, having been largely left behind in the rally led by the Magnificent Seven. While they've been hit harder than large-caps by market volatility since the start of the year - reflecting the fact the market sees small-caps as a riskier asset class - there's also a case to be made that they could eventually prove more insulated from global trade tensions, given their more domestically focused revenues. It's also worth remembering that many of today's US large-caps started out as small-caps - meaning that investing in this segment could offer the chance to back tomorrow's success stories early. To gain exposure to US smaller companies - a less liquid asset class - investment trusts offer a well-suited structure, allowing managers to hold stocks through market volatility without being forced to sell at the wrong time to meet redemptions. One option is Brown Advisory US Smaller Companies (BASC), whose managers sum up their strategy as the '3G approach': growth, governance, and go-to-market. This means that they look for companies leading or gaining market share in large or growing industries, run by transparent, capable, and shareholder-friendly teams, with the ability to deliver unique value to customers and maintain a competitive edge. The companies they invest in typically have strong balance sheets and pricing power, which can help them stay resilient in tougher market conditions. Indeed, the trust performed relatively better than the Russell 2000 Index in 2022, when interest rates rose sharply, and again this year amid heightened trade tensions. That said, BASC hasn't outperformed its benchmark since Brown Advisory took over in 2021, but the team's open-ended fund has a strong long-term track record, having beaten the Russell 2000 Index since its launch in 2007 and over the past decade. BASC currently trades at a wide discount of 10.5 per cent, presenting potential additional upside for shareholders on top of the performance of the underlying assets if the discount narrows or even closes. This could happen in an environment more conducive to small-caps - such as an economic recovery or early growth phase - when investors are more confident and willing to take on risk.
South China Morning Post
14-06-2025
- Business
- South China Morning Post
How the obsession with risky assets is putting global finance in peril
Fashionable, frivolous or downright foolish? Which of these words best describes the trend in markets toward derivatives, cryptocurrencies , digital assets and tokens as supplements or alternatives to traditional finance? Where is this great 'paper chase' leading? For one thing, it is likely to be causing a flight into gold. But unless gold is remonetised and mining output is stepped up sharply, that trend could lead to deflation and limited economic growth. So a retreat to sustainable safety will not be achieved via that route. The fact seems to be that the world – or at least the Western world – has lost its compass or common sense and is heading down a path towards economic and moral anarchy unless it abandons its irresponsible obsession with new, faddish and often highly risky forms of finance. In the world of finance, control is increasingly being separated from ownership of assets. Gone are the days when shareholders felt they genuinely owned part of the companies in which they bought stocks, shares and bonds. Gone, too, are the days when relatively few of those companies' shares were amalgamated into mutual funds or investment trusts as a means of facilitating ownership of shares in a number of companies. The Exchange Traded Fund (ETF) revolution means investors now own and actively trade indices containing the securities of hundreds of firms.
