Why investment trusts are the connoisseur’s choice of fund

Investment trusts have justified their reputation as the best type of collective investment in 2020, says Jonathan Davis.

Scientist doing sciencey things
Growth-oriented funds in the specialist healthcare sector have had a storming year
(Image credit: ©  PeopleImages / Getty Images)

This year has proved to be an excellent one for investment trusts. Despite the trauma of the pandemic, they have emerged from a torrid time with their reputation as the connoisseur’s choice when it comes to investment funds largely vindicated.

At the end of the November, the FTSE 350 Equity Investment Instrument index, which measures the aggregate performance of the investment-trust sector, was up by around 11% year-to-date, while the FTSE All-Share index was down by 13%. The 24% difference between the two indices is the widest it has ever been, with the single exception of 1999, at the height of the technology bubble. With the average investment-trust discount to net asset value (NAV) narrowing this month to under 4%, nearly back to the level at which it started the year, 2020 has turned out to be more annus mirabilis than annus horribilis.

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