The rating system is purely quantitative, using proprietary screens, and designed to highlight those trust which have demonstrated attractive risk and return characteristics over the long run, using the advantages of the investment trust structure to the benefit of their shareholders.
Unsurprisingly, Baillie Gifford is well represented in the growth category, but BlackRock has also done well, with the top two rated trusts being BlackRock Greater Europe and BlackRock Throgmorton Trust.
Rated funds in the income & growth category are a diverse set of trusts, with a mixture of natural income and dividends paid from capital, illustrating the flexibility of the investment trust structure.
For the first time this year the team have also aimed to identify those alternative income trusts which have ‘walked the walk’ over the long term.
With the space expanding rapidly, and newer asset classes emerging, Kepler have identified high- yielding trusts in the alternative assets space which have performed well on both an NAV and dividend yield basis.
Senior analyst Thomas McMahon said: ‘We believe investment trusts ability to gear, to invest without concern for inflows and outflows, and to hold more illiquid investments make them well-suited to investors with a long time horizon and we have set out to identify those which have made the most of these advantages.’
‘Last year trusts in the growth rated category outperformed their benchmarks by 10% on average in 2020. The income & growth rated funds underperformed by 1%, but this is a creditable performance given the terrible backdrop for dividends and the value investing style to which many yield-seeking trusts are tilted.’
The investment companies team at Kepler has, for the first time, also developed a quantitative system for scoring the trusts on value/growth and quality axes to understand how they compare to one another and identify patterns in the highlighted trusts. Unsurprisingly, growth-orientated trusts are well-represented across the board. However, we also think it noteworthy that the successful value-orientated trusts have tended to have a stronger tilt to quality holdings.
Growth rated funds
Income and growth rated funds
Alternative Income rated funds
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