Fund selection

Assuming one is not building a portfolio based entirely of ETFs, one approach that I think would suit many investors is to start by considering the “global growth” investment trusts.  This is because this is the largest and most competitive sector within the IT universe, and gives investors the widest exposure.  As its name suggests, this sector has a growth bias and so may be of less interest to income-seeking investors.  Nevertheless, the defensive nature of some of its constituents as well as some excellent long-term performers should appeal to all investors.  The sector consists of “companies whose objective is to produce a total return to shareholders from capital growth and some dividend income.  They will have less than 80% of their assets in any one geographical area.”

The second largest sector within the IT universe is the “UK Growth & Income” sector.  This consists of companies whose investment policy is to achieve a total return to shareholders from capital and dividend growth.  Typically, the company will have a yield on the underlying portfolio ranging between 110% and 175% of that of the FTSE All-Share Index.  They will have at least 80% of their assets in UK securities.  This means that the sector should appeal to all investors.

Irrespective of the number of holdings selected from these two sectors, individuals with larger sums to invest or those targeting more specific sectors/regions, growth or income bias, can select from a wide range of other sectors:


There are very few investment trusts with a bond focus, so investors looking to boost their exposure to this asset class may wish to consider other products.  The cheapest alternative is to use ETFs.



When buying any investment trust, one factor to consider is the premium/discount of the trust relative to its NAV.  This is because the price of an investment trust is determined by supply and demand, which can lead to trusts that have become popular because of good investment performance being priced at a premium to their NAV.  In such cases, investors have to judge whether they are happy to pay more then the value of the underlying assets for those trusts trading at a premium.  For investors building up a holding in an investment trust over time through regular investment, this is less of an issue as premiums/discounts vary.

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