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Two top investment trusts to buy today for long-term growth

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Edward Sheldon, CFA
·4-min read
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A stock price graph showing growth over time, possibly in FTSE 100
A stock price graph showing growth over time, possibly in FTSE 100

Investment trusts can be a great way for UK investors to access the stock market. Not only do they provide instant diversification but, in general, they’re also very cost-effective.

Here, I’m going to highlight two top growth-focused investment trusts I’d be happy to buy for my own portfolio today. Both own a selection of world-class companies and have strong long-term track records.

A top growth investment trust for 2021

One investment trust I hold in high regard is Monks (LSE: MNKS). It’s an under-the-radar offering from Baillie Gifford – the investment manager that runs the highly popular Scottish Mortgage Investment Trust. The aim of this trust is to generate capital growth over the long term by investing in global equities.

What I like about Monks is that it has a very well diversified portfolio. Unlike SMT, it doesn’t take large bets on higher-risk stocks. This reduces risk significantly. This is illustrated by the fact that while SMT is down about 8% this year after the tech stock sell-off, Monks is flat. Having said that, SMT has been the stronger performer over a 12-month time horizon, returning 114% versus 82% for Monks.

There are currently some great stocks in Monks’ portfolio. At 31 January, Alphabet, Amazon.com, and Microsoft were all top-10 holdings. This investment trust isn’t solely focused on tech stocks though. You’ll also find companies such as insurer Prudential, alcoholic beverages giant Pernod Ricard, and make-up powerhouse Estee Lauder in the portfolio.

Of course, there are risks to consider here. One is the trust has a bias towards US stocks. At 31 January, nearly 50% of the trust was in US stocks. If they underperform, the trust could underperform.

However overall, I think this is a fantastic growth-focused investment trust. With ongoing charges of just 0.48% per year, I see this trust as a great way to get global equity exposure.

Capital growth and income

Another investment trust I like is Bankers (LSE: BNKR). It’s also a global equity-focused product. This trust was launched all the way back in 1888, so it’s fair to say it’s been established for a while.

While Bankers has a focus on growth, it also aims to provide a bit of dividend income too. Currently, it offers a yield of around 2%. It’s worth noting this trust is part of an elite group known as ‘AIC Dividend Heroes’. These are trusts that have consistently increased their dividends for at least 20 years in a row. Bankers is actually the joint record-holder for consecutive annual dividend increases with 54 registered.

Like Monks, this investment trust owns some great stocks. Top holdings include the likes of Microsoft, Mastercard, and Visa. Performance hasn’t quite been as strong as that of Monks. Over the last 12 months, the trust has ‘only’ returned about 42%. However, it’s worth noting that during last year’s stock market crash, this trust held up better than Monks.

One risk to consider is it has quite a high exposure to the financial sector (nearly 25%). If this sector underperforms, it could impact the trust’s performance.

Overall however, I see this as a very solid growth-focused investment trust. Ongoing charges are a very-reasonable 0.50% per year.

The post Two top investment trusts to buy today for long-term growth appeared first on The Motley Fool UK.

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Edward Sheldon owns shares in Alphabet, Amazon, MasterCard, Prudential, Microsoft, and Scottish Mortgage Investment Trust. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Amazon, Mastercard, Microsoft, and Visa. The Motley Fool UK has recommended Prudential and recommends the following options: long January 2022 $1920 calls on Amazon and short January 2022 $1940 calls on Amazon. 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 2021