Investment trusts tap the profits in exotic and obscure global markets
Peter Walls, manager of the Unicorn Mastertrust fund, highlights three investment trusts as he shares where he'd put his money


Unicorn Mastertrust invests exclusively in investment trusts, aiming to deliver an attractive total return primarily in the form of capital growth. Trusts have a long and proud history dating back more than 150 years and have survived every conceivable geopolitical and economic disaster.
Donald Trump’s Liberation Day shenanigans will cause some headaches in the short term, but I am sure that investment companies will continue to serve investors well for decades to come. My confidence stems from a belief that an investment trust offers the best structure for successful investment in the long term. This is quite an assertion given that most fund assets around the world are in open-ended structures rather than closed-ended trusts.
The portfolio has a structural bias towards trusts that use their semi-permanent capital to invest in relatively illiquid assets on a global basis. Consequently, the fund has plenty of exposure to smaller companies (in the UK and overseas), listed private equity (LPE) trusts, and specialist trusts suitable only for a properly diversified portfolio.
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Big potential in British small caps
The largest holding in the first category, the Aberforth Smaller Companies Trust (LSE: ASL), is not only the largest trust of its type but also the only one to have a value-investing approach. Applied consistently since launch in 1990, this investment style experienced a protracted period of underperformance in the low-interest rate period following the global financial crisis.
A further headwind for the portfolio, which comprises around 80 UK smaller companies, came with the Brexit vote, followed by an accelerating shift of capital towards the American growth story. The fundamental ratings of ASL’s investments became so cheap that corporate buyers were attracted to the market, leading to a surge in mergers and acquisitions, which looks set to endure.
The ICG Enterprise Trust (LSE: ICGT) is an LPE trust that invests in buyouts in North America and Europe. Typically, these investments in private companies would be expected to be realised or refinanced within a period of between five and seven years, but sales have been somewhat elusive over the last couple of years. Questions have therefore been raised about the validity of the valuations of LPE trusts, and Mr. Market has ruled on the issue by pushing discounts to net asset value (NAV) ever wider.
As a result, over the last five years, ICGT’s NAV has expanded at a compound annual growth rate (CAGR) of 13.8%, while the share price’s CAGR has been only 8.5%. The discount to NAV has reached a staggering 37%. Earlier this month, the managers announced the sale of around 5% of the portfolio at a level that provided strong validation of the NAV and released capital for new investments and share buybacks.
Go for gold
Gold is globally fungible and difficult to apply tariffs to. Its price can also be volatile, so my selection in the specialist trust category comes with a bumper wealth warning. Golden Prospect Precious Metals (LSE: GPM) invests in gold and precious metals companies.
The fund’s effective exposure to gold miners is 91%, with the balance in silver producers. If fears of tariff-driven stagflation and interest rates staying higher for longer prove right, and inflows continue into physical exchange-traded funds (ETFs), GPM could be one to watch.
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Peter Walls is fund manager of the Unicorn Mastertrust Fund.
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