The MoneyWeek’s portfolio of investment trusts – 2025 update

The MoneyWeek portfolio of investment trusts was set up over a decade ago, but widening discounts have held back returns for some of our top investment trusts

(Image credit: Getty Images)

By Rupert Hargreaves

The MoneyWeek investment trust portfolio was set up in 2012 with a simple principle: to help readers build a global, all-weather, set-and-forget set of investments. We chose six London-listed investment trusts covering various investment styles, assets and countries.

We’ve made some changes to these trusts over the years, but the underlying approach has always remained the same. The six choices are currently Personal Assets (LSE: PNL), Mid Wynd (LSE: MWY), Scottish Mortgage (LSE: SMT), Caledonia (LSE: CLDN), Law Debenture (LSE: LWDB) and AVI Global (LSE: AGT).

The portfolio returned 9.3% on an equal-weighted basis in 2024, compared with 11% for the FTSE All Share and 22.1% for the MSCI World index. Still, these figures only tell half the story. On an underlying basis, using net asset value (NAV) rather than share price, the portfolio added 12.3%.

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The gap between NAV and market performance is particularly apparent at Scottish Mortgage and Caledonia. The latter’s share price returned just 0.6% in 2024, while its net asset value increased by 9.6%, thanks to the strong performance of its listed equity portfolio and direct private investments. Scottish Mortgage returned 24% in 2024 on an underlying basis, but a share-price return of 16.8%.

Discounts persist

The continued disconnect between underlying investment returns and share prices has become a persistent and concerning trend for the investment trust sector. The sector’s weighted average discount to net asset value (NAV) has hovered between 15% and 20% for the past two years. While some discounts narrowed last year – notably Edinburgh Worldwide and Baillie Gifford US Growth – the performance of Caledonia and Scottish Mortgage illustrate investors’ continued caution. Caledonia’s discount to NAV expanded from around 30% at the beginning of 2024 to nearly 40% by the end of the year. Before 2020, the discount rarely exceeded 20%.

On the plus side, AVI Global has been making the most of this disconnect. The value-focused trust has built a portfolio of companies and other trusts trading at a deep discount to the underlying NAV. Its biggest winner last year was US private equity giant Apollo, which it sold in November for a total return of 166% over three years – a 41% annualised gain.

At the other end of the spectrum, Law Debenture has traded at a premium to its net asset value for much of the year, and despite its UK value focus, it clocked up the second-best performance in the portfolio. The trust produced a total return of approximately 14.3% (NAV return 12.2%).

Substantial positions in NatWest, Marks & Spencer and Rolls-Royce helped its performance – Rolls-Royce and NatWest returned 92% and 83%, respectively. These results are a great reminder of why value investing is still relevant, especially in unloved markets.

Gold glitters

Personal Assets chalked up a return of 6.6% on a NAV basis and 6.2% on a total return basis. The trust started the year with 10.7% of its portfolio invested in gold bullion, a well-timed decision as the yellow metal returned 27% in 2024. Exposure to high-quality equities (28% of NAV at the end of November) also helped the portfolio, while short-dated bond exposure provided stability. Exposure to inflation-protected bonds (just over a third of the portfolio at the end of November) proved a drag.

Aside from Caledonia, the biggest disappointment in the portfolio was Mid Wynd. We’ve been closely watching this trust – the smallest in the portfolio – for the past three years.

Towards the end of 2023, the trust’s board replaced long-standing portfolio manager Artemis with Lazard Asset Management, which replaced all but two holdings in the portfolio. The changes have yet to yield the desired results. The trust returned just 8% on a NAV basis in 2024, underperforming its benchmark by 14% for the third year in a row. We’ll be keeping an eye on this trust to see if Lazard can turn the performance around.

The current portfolio for the Snowball started on the 09/09/22.

The plan was to invest 100k in Investment Trusts to return an income stream in ten years of £13,780.00 where you retained all your capital to pass on to your nearest and dearest.

Due to favourable market conditions, weak share prices mean higher yields, the current plan is to return an income stream at the end of 2033 of £16,519.00

An alternative plan would to invest for TR and an ARR of 7% would mean a portfolio valued at 200k. Of course it could be higher or it could be lower, that’s the gamble. If you have more time to invest you could have a foot in each camp, whilst remembering with compound growth your growth in the final few years equals all the growth in the early years.

If your portfolio was valued at 200k and you use the 4% rule it would provide income of 8k pa.

Investor or gambler or both, the choice my friend is yours.

Insider: directors lock in 9% dividend yield

After sinking to a multi-year low following a trading update, this investment chief decided it’s time to buy.

by Graeme Evans from interactive investor

Buyers of 9.3% yielding Assura 

AGR

 Buyers of 9.3% yielding Assura AGR
were last week joined by the healthcare landlord’s own investment chief after he spent £39,000 on shares at a decade low price

Thursday’s purchase by Steven Noble took place as long-term government bond yields set a post-2008 high to put further pressure on the appeal of real estate investment trusts.

His dealings at 36.6p followed a third-quarter update in which Assura flagged its strategic progress since a landmark deal increased exposure to the private healthcare sector.

The update also highlighted Assura’s strong position to support government policy that continues to shift more towards community healthcare and reliance on private providers.

This follows the £900 million of funding for GPs announced in December and an additional £100 million of committed investment to upgrade the GP estate.

FTSE 250-listed Assura has a £3.2 billion portfolio of more than 600 healthcare buildings, from which over six million patients are served.

Its annual rent roll stands at £176.9 million, about a quarter of which is now private healthcare after August’s acquisition of Northwest’s 14 private hospitals for £500 million.

The tenants are all major hospital operators in the UK, comprising mainly Nuffield Health, Spire Healthcare and Circle Group. The assets benefit from an average rent cover of 2.3 times.

The deal represented 2024’s second strategic development by Assura after May’s announcement of a £250 million joint venture with the Universities Superannuation Scheme.

With an initial portfolio of seven assets valued at £107 million, the venture will invest in assets let to the NHS or GPs and is seeking to reach £250 million within three years.

For Assura, this arrangement provides a further new source of funding as it looks to diversify into sectors at scale so that it targets growth in the right market at the right time.

An asset disposal programme launched alongside the hospital acquisition raised £48 million from 17 properties in the third quarter, with active discussions on a further £110 million.

The completed disposals mean Assura is on track to reduce its loan-to-value ratio to below 45% and net debt to earnings to below nine times over the next year to 18 months.

Operationally, it reported positive progress on rent reviews after 59 were settled in the quarter with an uplift of £600,000 or 7.2%. About a fifth of the rent roll is due for review in the first quarter of the next financial year.

Deutsche Bank, which has a price target of 48p, said that Assura was making “some headway”.

Stifel added that shares are “very undervalued”, pointing out that the 9.3% dividend yield is fully covered by recurring earnings and materially higher than undiversified peer Primary Health Properties.

It added: “Assura offers operational excellence and a portfolio that is able to grow across several healthcare property sub-sectors, driving superior earnings growth.”

Last week’s purchase of shares by Noble was his second since joining the company in September in the newly created role of chief investment officer. He also bought £100,000 of stock at 38.6p in November, which compared with the 47p share price at the start of 2024 and 69p in 2022.

Peel Hunt highlighted a price target of 45p in November but said that its preferred pick remained Primary Health Properties, partly due to income security resulting from government backing over 89% of the rent roll versus Assura’s 66%.

Thursday 16 January

Invesco Bond Income Plus Ltd ex-dividend date
Invesco Global Equity Income Trust PLC ex-dividend date
JPMorgan China Growth & Income PLC ex-dividend date

The average UK house price has risen from £1,884 in 1953 to a staggering £265,240 in the 4th quarter of 2024. Using data from Nationwide Building Society.

Plus you had somewhere to live, without paying rent.

Looking for ISA dividend shares? 2 passive income heroes to consider today

If broker forecasts are correct, these top UK dividend shares could provide ISA investors with a large and growing passive income.

Posted by

Royston Wild

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services.

Buying dividend shares can be a great way to grow one’s Individual Savings Account (ISA).

The cash rewards from high-yield dividend stocks can be used to buy lots more shares. This in turn can lead to exponential potential growth over time thanks to the mathematical miracle of compounding.

With this in mind, here are two top dividend shares I think are worth serious consideration.

The PRS REIT

Dividends from share investing can fluctuate wildly according to broader economic conditions. So given the uncertain outlook for 2025, now could be the time to consider buying dividend payers in defensive sectors.

The PRS REIT (LSE:PRSR) is one stock that could prove a wise buy. As a major build-to-rent specialist — it has more than 5,400 residential homes on its books — rent collection remains stable at all points of the economic cycle.

Furthermore, Britain’s ongoing housing shortage means it doesn’t have to seriously worry about falling occupancy that would impact profits.

There’s another good reason I think the firm’s an attractive dividend share to consider. Under real estate investment trust (REIT) regulations, it must pay a minimum of 90% of annual profits from its rental activities out in the form of dividends. This is in exchange for certain tax breaks.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice.

For this financial year (to June 2025), PRS REIT offers a 4% dividend yield. This is ahead of the 3.6% and 3.4% averages for the FTSE 100 and FTSE 250 indexes respectively.

And for financial 2026, predictions of dividend growth drive the yield to 4.2%.

Not even residential property stocks are completely risk free. A particular problem for PRS REIT could be if interest rates remain at or around current levels, dampening asset values and impacting borrowing costs.

But on balance, I think the FTSE 250 company is worth a close look.

Pan African Resources

A bright outlook for gold prices means Pan African Resources (LSE:PAF) also demands serious attention, in my opinion.

In sterling terms, gold struck fresh record highs last week. On a US dollar basis it also reached new multi-week peaks. I believe prices are likely to continue climbing as macroeconomic and geopolitical worries — exacerbated by US President Trump’s words on trade tariffs and foreign policy — drive demand for safe-haven assets.

Investors have a multitude of UK precious metal stocks to choose from to capitalise on this. Those seeking dividends may wish to consider Pan African Resources, a mid-tier gold supplier in South Africa.

Predicted dividend growth over the short term means the miner’s dividends are a chunky 4.4% and 7.7% for the next two financial years (to June 2025 and 2026).

Of course there’s no guarantee that gold prices will continue rising. They could fall for a variety of reasons, for instance if the US dollar strengthens or the economic landscape improves.

Yet even if these affect Pan African’s earnings, the business still looks in good shape to pay those large predicted dividends. Payouts are covered between 3.1 times and 3.9 times by anticipated profits, comfortably above the safety benchmark of two times and above.

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But as always, as it’S your hard earned best to DYOR.