With investors young and old perusing the best investment funds ahead of the ISA deadline, The Association of Investment Companies has asked financial advisers and wealth managers to suggest investment trusts for millennials.
Investment companies offer strong long-term performance, income benefits and exposure to a wide range of assets, but with over 300 of them listed on the London Stock Exchange, it can be difficult to choose, so here we have slimmed it down to five different trusts.
(As well as this article for millennial and younger investors, there are also tips on investment companies for mid-life investors and retirees here.)
Global funds for diversification
Tomiko Evans, chief investment officer and managing director at Crossing Point Investment Management, said: “Investment companies offer a unique range of investment opportunities and fantastic returns. We run four diversified, risk-rated investment trust model portfolios which can be matched to a client’s risk appetite and life stage. We pick funds based on criteria including performance, gearing, discounts, charges, financial ratios, and the diversification of underlying funds.
“A few funds which we would recommend for a young millennial just starting out with a longer-term investment horizon would be Scottish Mortgage Investment Trust (LON:SMT) and Edinburgh Worldwide Investment Trust (LON:EWI), both of which have impressive track records and are global funds for diversification. Edinburgh Worldwide invests in global small cap companies and is slightly more volatile but has provided excellent long-term returns,” added Evans.
Philippa Maffioli, senior adviser at Blyth-Richmond Investment Managers, said: “I have always been an advocate of young people building the foundations of their investment portfolio via monthly contributions and I often recommend Templeton Emerging Markets Investment Trust (LON:TEM). Chetan Sehgal is an experienced manager who took the helm in 2018.
“Exposure to this investment trust provides long-term capital appreciation through investment in companies operating or listed in emerging markets, thus providing interesting international exposure with a strong bias towards technology.”
Longer-term horizon means you can take more risk
Paul Chilver, associate and financial planning manager at Birkett Long, said: “Many think of millennials as younger investors. However, someone like myself who fits this description is now closer to forty than thirty! Despite this, when looking at investment trust suggestions for this demographic you can still look on the longer-term horizon and therefore accept in most instances a greater degree of risk and volatility.
“The first investment trust I would suggest for this type of investor would be Templeton Emerging Markets Investment Trust which after a few years of strong performance is still available at an attractive discount of around 7%.
“Japanese equities have also been in the news recently due to the Nikkei reaching 30,000 points for the first time in over 30 years and my next trust is in the Japanese smaller companies sector. It is the investment trust managed by Baillie Gifford – Baillie Gifford Shin Nippon PLC (LON:BGS) – which, although volatile, has recently provided strong returns,” said Chilver.
Real change to society now and into the future
Saftar Sarwar, managing director and chief investment officer at Binary Capital Investment Management, said: “Keystone Investment Trust plc (LON:KPC) is an investment trust looking to invest in future global growth investment opportunities which aim to deliver real change to society now and into the future.
“This is the choice for you if you are an investor seeking an innovative trust to hold for long-term growth, whilst contributing towards a more sustainable and inclusive world by investing in companies whose products or services make a positive social or environmental impact.”
Read what advisers told AIC about mid-life investors and retirees here.