The best investment trusts for your pension - experts reveal their picks trends now
Best investment trusts for your pension: Tips for your portfolio throughout your financial life
When it comes to building your pension pot or investing it for retirement income, finding a reliable investment matters.
Returns are never guaranteed - and investments go down as well as up - but there are some characteristics that make some stand out.
Many investment trusts have built remarkable track records for raising dividends, making them a popular option for people drawing down an income in retirement.
But financial advisers have also come up with some top picks from the world of investment trusts for those still building up a pension too.
The Association of Investment Companies has compiled expert recommendations for what is known in financial jargon as the 'accumulation' phase of a saver's life, and for those needing an income in the 'decumulation' stage in retirement.
Investment trusts are listed companies with shares that trade on the stock market.
They are known as closed-ended, because investors can buy or sell shares to join or leave, but new money outside this pool cannot be raised without issuing new shares.
That is unlike open-ended investment funds where money is pooled to invest in shares, bonds or other funds.
Investment trusts can be riskier than funds because their shares can trade at a premium or discount to the value of the assets they hold - see below for more on how this works.
Although the list below has been picked by four professional financial advisers, remember that this is not individual financial advice and you should always check if an individual investment is right for you. If in doubt, seek independent financial advice.
Saving: 'I'm still building up a pension'Paul Chilver, financial planning manager at Birkett Long
With the seemingly ever-increasing state pension age and the forthcoming increase to the age an individual can access their pension, investing into a pension is for the long term.
With this in mind investment trusts, many of which are trading close to record discounts, could be an excellent option.
Discounts are particularly attractive on UK-focused investment trusts and one suggestion for the accumulation stage of investment is the Mercantile Investment Trust managed by JPMorgan which has been at a double-digit discount for many months despite very good short-term performance.
Mercantile Investment Trust (Ongoing charge: 1.41 per cent)
Philippa Maffioli, senior investment manager at Blyth-Richmond Investment Managers
During the accumulation phase when growth and diversification are essential, I recommend Worldwide Healthcare Trust.
This global trust gives investors the opportunity to gain exposure to pharmaceutical, biotechnology, and other related healthcare companies all within an actively managed portfolio.
These range from large multinational pharmaceuticals to unquoted emerging biotechnology companies. The fund is managed by OrbiMed Capital which was founded in 1989 and has become the largest healthcare investment firm in the world.
The team are actively looking at nearly 1,000 companies and the team works to identify sources of outperformance as well as those with underappreciated products in the pipeline with high quality management teams and strong financial resources.
Worldwide Healthcare Trust (Ongoing charge: 0.83per cent)
I am very keen for my clients to gain exposure to the management style of Spencer Adair and Malcolm MacColl of The Monks Investment Trust during the accumulation phase of a Sipp.
Their aim is to focus on global companies from a range of profiles with above average earnings growth which they expect to hold for around five years.
That said, they are known for addressing issues head on and aren’t afraid to take a critical look at their portfolio when necessary, which I believe is very compelling.
I believe that Monks is well positioned to capitalise on the continuous shift to a more digitalised world and must be included in a portfolio where growth is required.
Monks Investment Trust (Ongoing charge: 0.69 per cent)
Doug Brodie, founder and chief executive of Chancery Lane
In building pensions investors should take note that trusts like Lowland, Murray International and City of London have all handsomely outperformed the FTSE All Share over the last 20 years.
Investment trusts may not have the sales and marketing budgets of pension companies so investors have to look a bit harder.
A quick look at the long-term returns will show folk there’s a good reason that institutional investors are big investors in trusts.
Lowland (Ongoing charge: 1.03 per cent)
Murray International (Ongoing charge: 0.78 per cent)
City of London (Ongoing charge: 0.65 per cent)
Neil Mumford, chartered financial planner at Milestone Wealth Management
For those looking for growth, I’d recommend JPMorgan Global Growth and Income Trust. This is one of the few investment trusts to be trading at a premium, but this should not concern long-term investors.
It places a high emphasis on the world’s largest stock market the US, accounting for two-thirds of the portfolio. It is a high conviction portfolio with 50 to 90 holdings, with the top ten making up more than 40% of the portfolio.
This has allowed it to outperform by some margin with a 305 per cent return over the last ten years.
There will be times when there may be swings in the portfolio value but for the patient investor this will hopefully pay off. If there was concern about the premium, this trust would also be ideal for regular monthly investments.
