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These 10 investment trusts crushed the best open-ended funds in 2021, with one doubling buyers’ money in just 12 months — Here’s how they were able to trounce the competition

victoria street edinburgh
Edinburgh, where one of the leading investment trust firms Baillie Gifford is based.

Mikhaila Friel/Insider

  • Wealth firm Quilter Cheviot crunched the numbers on the top performing trusts and funds of 2021.
  • Investment trusts, or closed-ended funds, crushed their open-ended counterparts.
  • The top performing investment trust was Baillie Gifford’s private-equity focused Schiehallion.

As the dust settles on 2021 and data covering the full year is crunched, sorted and analyzed there is likely to be no shortage of interesting findings.

While always keeping in mind that past performance does not indicate future performance, plenty can be learned from recent history that can inform better investing decisions going forward.

A example of such data is the returns generated by the best investment trusts compared with the best open-ended funds.

Wealth manager Quilter Cheviot, which runs $37 billion of client money, has crunched the numbers on which investment trusts and open-ended funds performed best in 2021, and there’s a stark difference between the two major fund types.

Investment trusts, also known as investment companies or closed-ended funds, are collective investment vehicles which contrast with their more numerous open-ended counterparts in a few key ways. The most fundamental differences are that they are listed on stock exchanges and issue shares, rather than being unlisted and issuing investors with fund units. Real estate investment trusts (REITs) are one such example. Shares in a trust have a fixed supply, whereas open-ended funds issue new units to every buyer of the fund, such as a mutual fund. 

The stand-out finding made by Quilter Cheviot, which looked at the best closed- and open-ended funds listed on the UK market, is that the top ten investment trusts absolutely trounced the performance of the top ten open-ended funds in 2021. 

The top performing trust, for example, was Baillie Gifford’s Schiehallion. The private-equity focused trust returned a whopping 103%, while the best performing open-ended fund Guiness Global Energy managed just 45.7%.

That is not an isolated case, with the top ten investment trusts ranging from a 103% total return down to a still impressive 45%, whereas the open-ended equivalents ranged from 45.7% at the top to 33.7% at number ten. 

Here are both top tens in full. 

Top ten best performing investment trusts in 2021

 

Price Total Return 2021 (%)

Schiehallion

103.1

Geiger Counter 

91.3

VietNam Holding

81.8

BMO Private Equity Trust

66.2

NB Private Equity Partners

65.0

SLF Realisation Fund

61.6

Tufton Oceanic Assets

59.6

Riverstone Energy

56.6

Ashoka India

49.6

Standard Life Private Equity

49.0

Source: JP Morgan and Quilter Cheviot 

Top ten best performing open-ended funds in the Investment Association universe in 2021

 

Total returns (%) in GBP

TB Guinness Global Energy

45.72

Liontrust India

36.63

VT De Lisle American

35.97

Stewart Investors Indian Subcontinent Sustainability

35.70

Jupiter India

35.47

L&G Global Technology Index

34.97

HSBC US Multi-Factor Equity

34.68

Fidelity UK Smaller Companies

34.54

Halifax North American

33.82

Scottish Widows American Growth

33.69

Source: Morningstar, Quilter Cheviot

“2021 was a year dominated by the reopening of the global economy as a result of the successful vaccine rollout, followed swiftly by the emergence of new variants and reminders that the Covid pandemic is a long way from being resolved,” said Nick Wood, head of fund research at Quilter Cheviot.

“However, in the investment universe, this didn’t stop asset prices continuing to rise, with long-term trends continuing to play out. No more was this the case than in the investment trust market, where private equity dominated the performance tables following strong growth in the previous 12 months. This included Baillie Gifford’s Schiehallion, NB Private Equity, BMO Private Equity, Riverstone Energy and Standard Life Private Equity.”

“We also saw a number of specialist vehicles, including Vietnam Holding and Ashoka India, both focused on the individual emerging nations, which managed to withstand the contagion risk spreading from China in the form of the Evergrande defaults and economic and regulatory tightening. We also saw Tufton Oceanic Assets perform well, which invests in shipping vessels.”

Wood said outperformance can be down to the structure of the vehicles that can offer key advantages in terms of the assets they can tap into. Investment trusts are much better suited to holding illiquid assets because they don’t need to sell things when investors divest to give them their money back. Investors can just sell their shares in a trust on the open market. With illiquid private assets often delivering some of the highest returns, this is a major advantage. 

“Comparing the winners within the trust world versus open-ended, two things jump out,” he said. “Firstly, the winners in the trust space include a significant number of illiquid assets, highlighting the benefit of the structure, and investments that largely cannot be held comfortably within the open-ended space.” 

“It is also noticeable that the winners in the trust space were some ways ahead of those within the open-ended world, at least considering the top 10, highlighting the opportunities out there for investors who are a little more investment structure agnostic, or consider trusts to be beneficial to access some areas of the market.” 

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