The last year has been a year of ‘change’ politically, economically and societally. Across the world we’ve seen governments topple, not least a new government in office in the UK after 14-years of Conservative rule, where Kier Starmer’s Labour Party surged to power on a mandate of ‘Change’.
Over the ocean, the second coming of Donald Trump after the victory of his ‘Make America Great Again’ movement on the Republican ticket sent shockwaves throughout to world, not least in Europe where in the backbone of the EU, Germany and France, saw their own centrist governments crumble in the face of populist movements and anaemic economic performance.
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Outside the western democracies, instability across the world – the Middle East, Eastern Europe, South East Asia, the Horn of Africa – has made it a difficult market to call, so sometimes it’s better to leave it to the professionals. We selected the top-five investment trusts over the last year, according to the Association of Investment Companies’.
Top Five Investment Trusts over one-year (to 17th December 2024)
| FUND | AIC SECTOR | ASSETS | 1YR PERFORMANCE |
| Petershill Partners LON:PHLL | Growth Capital | GBP3.6bn | +91.6% |
| Alpha Real Trust [LON:ARTL] | Property – Debt | GBP134.4m | +73.7% |
| Crystal Amber Fund [LON:CRS] | UK Smallcap | GBP125m | +70.3% |
| Baillie Gifford US Growth [LON:USA] | North America | GBP866.7m | +67.0% |
| Seraphim Space [LON:SSIT] | Growth Capital | GBP222.9m | +66.8% |
Source: AIC
It’s quite a varied list, and even in the top-10 the performing sectors are quite well spread around. By contrast, the bottom of the AIC’s list featured its Renewable Energy Infrastructure and VCT sectors quite heavily. The average one-year performance (on a share price total return basis to 17th December) for all investment trusts was +15.2%. If we take VCT out of the mix, average one-year performance was +15.7%. The 3i Group LON:III is a significant investment company player, and the AIC also calculates average performance excluding-3i which was +9.6% for the year.
As sectors were so varied, it’s fair to say that what makes the difference is manager performance, as opposed to market performance, but finding that manager and then hoping that they can repeat their magic on a consistent basis is the trick, and we hope that this weekly guide to investment trusts from The Armchair Trader at least introduces new names, and new ideas which you can research in greater detail yourselves.
And so to the top-five.
#1. Petershill Partners LON:PHLL
Petershill Partners Is a fund from Goldman Sachs founded in 2007. It’s been on the London Stock Exchange since 2021 and is focussed on private equity and private capital – a real growth area for small-to-medium-sized businesses who have found traditional bank lenders rolling-back and liquidity and the potential to raise funds on most stockmarkets underwhelming.
The investment trust co-invests with over twenty private equity and private debt firms, with more than 200 private equity funds to invest in, and offers investors the potential to gain exposure to the private equity sector; a sector of the financial services industry that retail investors rarely have the opportunity to participate.
The fund aims to invest in alternative asset manager stakes primarily across the following four asset classes: private equity, private real assets, absolute return strategies invested principally in publicly-traded securities, and private credit.
Lead fund manager, and managing director is Ali Raissi, who has been with Goldman Sachs since 1999. He is assisted by Robert Hamilton Kelly, who comes from a special situations and investment banking background. As the fund has only been listed for four-years, longer-term performance data is not available from AIC.
#2. Alpha Real Trust [LON:ARTL]
Alpha Real Trust is a debt fund, not a full member of AIC, selectively focuses on asset-backed lending, debt investments and high return property investments in Western Europe that are capable of delivering strong risk‑adjusted returns.
The current portfolio (as of end 3Q24) was:
| 30 September2024 | 31 March 2024 | ||
| High return debt | 36.8% | 39.2% | |
| High return equity in property investments | 14.7% | 26.1% | |
| Other investments | 30.8% | 20.6% | |
| Cash | 17.7% | 14.1% |
Source: ART
The Guernsey-domiciled fund is managed by Phillip Rose, CEO of Alpha Real Capital, who has a background in real estate, working for ABN Amro and a number of commercial real estate investment management firms over the last 30-years and targets investment, development, financing and other opportunities in real estate, real estate operating companies and securities, real estate services, infrastructure, infrastructure services, other asset-backed businesses and related operations and services businesses that offer attractive risk-adjusted total returns.
It’s not a big sector, comprising just five funds, but ART is head and shoulders above its peers. Over 10 years ART returned +359.8% against a sector average of +54%.
#3. Crystal Amber Fund [LON:CRS]
We have covered Richard Bernstein’s activist Crystal Amber Fund previously. The fund is in wind-up, but over its managed winding-up process the fund is still a top performer in its sector, monetising the portfolio in an orderly manner in order to maximise value received and making timely returns of capital.
Crystal Amber is a completely different beast to many of the other funds in the UK Smaller Companies sector (which in some way explains its divergence away from the average fund in this sector, but also the way the fund has ended its run) in that it’s primarily a closed-ended activist fund that isn’t scared of using its financial clout in the companies it holds to execute real operational and strategic changes. It does this as it thinks it will help turn around the investee company’s performance and further its objectives to provide its shareholders with sustainable, attractive total returns uncorrelated to any indices and even in this wind-down process can still realise value.
Historically, the fund started the process with a hard scry, conducted though its internal screening process and its targets are valued with a focus on their replacement value, cash generation ability and balance sheet strength. Bernstein explained that Crystal Amber looked at a potential investment opportunity ‘as is’ but then envisaged, with a bit of prompting, what the company ‘could become’ to maximize the fund’s shareholder value.
In Bernstein’s assessment, the ongoing exit process can give back shareholders significant, uncorrelated returns that can replicate the strong performance it has had in the last year. So, despite not making any new investments – although maintaining the mandate to increase stakes in existing investments – Crystal Amber could still provide a profitable curtain-call.
#4. Baillie Gifford US Growth [LON:USA]
Baillie Gifford US Growth is a constituent of the AIC’s North America sector, which has seven-funds, and is managed by Gary Robinson and Kirsty Gibson. As previously reported Robinson has been with Baillie for 20-years and has invested across numerous regions before settling on North America, with Gibson being with the investment manager for 12-years.
The GBP815m fund aims to invest predominantly in listed and private US companies which the managers believe have the potential to grow substantially faster than the average company, and to hold onto them for long periods of time, in order to produce long term capital growth.
The team invests in exceptional US businesses with the potential to grow substantially faster than the market and deliver above market returns. Such businesses tend to operate at the cutting edge of technology-led change, and USA has exposure to companies focused on AI, space travel and online services.
Specifically, they target stocks with the potential to grow the returns of publicly listed companies by 2.5x or more over rolling five-year periods and by 5x for unlisted companies. The managers believe such businesses tend to operate at the cutting edge of technology-led change, and they actively seek companies with unique corporate cultures, which they view as the best and most meaningful indicator of an enterprise’s long-term performance potential and capacity to seize market opportunities.
#5. Seraphim Space [LON:SSIT]
Expanding the technology and North America theme one of the most interesting investment trusts – in The Armchair Trader’s opinion – is Seraphim Space [LON:SSIT], part of the AIC’s Growth Capital sector.
Seraphim is the world’s first listed space-focussed investment trust and invests in a diversified portfolio of early-stage and growth-stage companies across the global space sector. Their focus includes satellite communications, space exploration technologies, and space-enabled applications.
Seraphim gives investors a broad range of investment possibilities from ground-based facilities to outer space exploration. The three elements of the space industry have traditionally been satellite manufacturing, support ground equipment manufacturing, and the launch industry. With the likes of privately funded firms like Space X and Virgin Galactic, space tourism now joins that list. Given the War in Ukraine, and the West being cut off from access to technology from Russia’s Soyuz launch vehicle family and infrastructure, a boom in contracting out the launch job to private corporations has started to take shape.
The investment trust, managed by Mark Boggett, James Bruegger and Rob Desborough, the fund has a global mandate to boldly go where no fund has gone before. The majority of Seraphim’s top deals in the last quarter were concentrated in hardware-intensive sectors including satellite and rocket launcher technologies.
However, the fund’s largest transaction of the quarter was World Labs, a geospatial intelligence company that has recently emerged from stealth mode with a top tier founding team, and syndicate of investors. as in previous quarters. The fund managers hope to see science fiction become science fact and are charting an exciting course.
While the past year has presented a complex and dynamic investment landscape, these top-performing investment trusts offer a glimpse into the future of finance. By diversifying across sectors like private equity, real estate, small-cap equities, and cutting-edge technologies, these funds have demonstrated resilience and the potential for significant returns. As investors navigate an uncertain market, carefully considering these investment vehicles and their underlying strategies can be a prudent approach to long-term wealth growth.
