Which trusts have beaten the FTSE All-Share?

[Avantegarde]

I have been bothered by some of my ITs failing to beat their relevant indexes in the past five years (my definition of the short-to-medium term).

So I went to the statistics on the AIC website https://www.theaic.co.uk/aic/find-compa ... earch_form to see how many trusts in the UK equity income sector have in fact beaten the FTSE All-Share index (total return) in that time.

41% total return is the relevant benchmark here.

The answer? Just ten trusts have performed better. Sixteen have either matched that index (big deal), or returned less than a tracker would have done.

What do you think?

[OhNoNotimAgain]

Crikey, that is heretical talk on these boards.

More to the point is that ITs have two unique advantages, they can use gearing and are not subject to the ebb and flow of redemptions and subscriptions, and another one common to all active funds is that they can invest outside the index.

Those three features give them a massive head start and ought to make them capable of easily beating the index if active management really worked.

[gbjbaanb]

Things come and go, eg Chelverton (SDV) is listed as one of those beating the index with 67% return. But over 1 year, its down -17% (compared to -0.6% for the average).

So as they say, past performance is not reflection on what you might get in the future.

The only thing of real interest was that City of London almost exactly matched the average in all time spans! How boring

Looking at the results, the only ones that have beated the average consistently are:

Finsbury Growth and Income
JP Morgan Claverhouse.

that's it, If I stretch the criteria a bit, then you could include CTY, Std Life Equity Inc, and British and American.

But if you looked beyond the "UK Equity Income" selection, trusts like Lindsell Train hammer all of the above by a huge margin (957% over 10 yrs compared to 220% for UK).

[Avantegarde]

But if you looked beyond the "UK Equity Income" selection, trusts like Lindsell Train hammer all of the above by a huge margin (957% over 10 yrs compared to 220% for UK).

Indeed, investing abroad has been a much more successful strategy (and I am glad I did it), as shown by this AIC table for Global trusts for the past five years: https://www.theaic.co.uk/aic/find-compa ... l&manager=

or Global Equity Income trusts: https://www.theaic.co.uk/aic/find-compa ... e&manager=

However, by comparison, the five-year total return on a FTSE World ex-UK tracker has been 90%.

It is amazing how many "global" trusts have failed to beat such an index. What do their managers do all day? They remind me of Woody Allen's joke. What is a stockbroker? Someone who invests your money until it is all gone.

[Hariseldon58]

I have always liked the UK Equity Income Trusts but felt they had become a little too popular in the search for Income in the last few years and did not offer the best value.

I have returned to the sector over the last two or three months, as I feel they offer better value and looking forward I think (hope ) they will perform better.

I tend to look at the NAV performance of trusts rather than share price return, I appreciate what you get is Share Price return but the Trust Management are directly responsible for the NAV performance and on that view the average Trust in the AIC has outperformed the All Share ( represented by the Vanguard All Share Index Fund 43%) at 45% (Share Price) and 50% (NAV)

I took a look at two Smart Beta funds in the UK Equity Income sector, both underperformed the All Share, Vanguard Equity Income Index at 30% and the VT Munro Smart Beta fund has done better than the Vanguard Fund but also underperformed at 35%. The figures are five years to the end of September.

Looking at Smart Beta ETFs we have iShares IUKD with 5 year performance at 28% and State Street UKDV at 14%

So on the basis of comparing investments in the same area then they look Ok as a whole.

[OhNoNotimAgain]

ITs benefit from the ability to use gearing. QE, and the associated low interest rates, helped all enterprises with debt, including ITs.

QE stopped 3 years ago so five year historic analysis includes a couple of years of that boost which helped growth and momentum stocks at the expense of value stocks.

The story since the "Minsky Moment" in early February 2016 when the the situation reversed, and it could be argued that more "normal" conditions prevailed, is a little different.