Should you put your trust in investment trusts?

British investors have steered clear of investment trusts in recent years. They are missing a trick, says Max King

British flag waving in front of The Shard over a cloudy day
(Image credit: Getty Images)

“Keep faith in UK equities,” advises Scott Evans of the London Business School: “They’ve done well over 70 years.” Over that time, annualised real returns for Treasury Bills (comparable with savings accounts) have been 1.4%; for long-dated gilts, 2.1%; house prices 2.8%, world equities 6.3%, and UK equities 6.5%. UK smaller companies, at 9%, have performed even better, but have lagged in recent years.

Yet unlike US investors, British ones chase after the lowest returns. According to Janus Henderson, cash savings rose £51 billion last year to £2.05 trillion, or 80% of the national debt. Half of defined-benefit pension funds’ assets are invested in bonds, despite yields having risen (and thus values fallen) for four years. According to Abrdn, 50% of personal wealth is invested in property, nearly double the ratio in the US, and just 8% in stock markets. This is the lowest in any G7 country and compares with 33% in the US.

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.