- HL’s experts pick investment trusts for investors to watch in 2024.
- Volatility is likely to continue through 2024, on a long-term view this could be a great opportunity to pick up reasonably-priced stocks.
- Our trusts to watch for 2024 have a cautious tone.
2024 is not going to be a year of rapid or sustained economic growth. Market consensus in recent weeks seems to have shrugged off recession fears and is pricing in a Goldilocks scenario, where central bankers cut interest rates but not because they are forced to by an economic hard landing. The experts at Hargreaves Landsdown aren’t quite as optimistic, and their five trusts to watch for 2024 have a cautious tone.
But that shouldn’t stop you investing – while volatility is likely to continue through 2024, on a long-term view this could be a great opportunity to pick up reasonably-priced stocks with international revenues, attractive dividends, good dividend cover and robust balance sheets. The experts on Hargreaves Landsdown’s investment research team have picked five investment trusts to watch for 2024 and beyond, three of which are shared below:
Personal Assets Trust
Run by Sebastian Lyon and Charlotte Yonge at Troy Asset Management, this is a multi-asset investment trust with concentrated equity holdings that aims to preserve capital – that is, not lose money when the market takes a downturn – and focuses on total returns for shareholders. Coming into a year where we think the global economy will be challenged and markets volatile, we wanted to choose a trust that invests in a mix of equities and lower risk assets such as government bonds, gold and cash.
The managers of the trust use what is called a discount control mechanism to buy back shares when the trust is trading at discount and issue shares when it is trading at a premium to net asset value. The aim of this is to reduce the volatility of the trust’s share price in relation to the underlying value of its holdings. We have high conviction in this management team and feature their open-ended fund on the Wealth Shortlist.
City of London
This UK equity income investment trust is run by Job Curtis – one of the most highly regarded managers in the sector. The trust has been named as a Dividend Hero by the Association of Investment Companies, which means it has grown its dividend for more than 20 years in a row. In fact, this trust has grown it for more than 50. The managers of the trust have the ability to reserve investment gains in previous years to boost dividend payments in years when the underlying companies may cut payouts. Though this income could vary and is not guaranteed.
The trust aims to provide shareholders with both income and growth by investing in large, good-quality companies listed in the UK, although the manager can invest up to 20% overseas when he finds good opportunities. The top 10 investments feature well-known businesses such as HSBC, Tesco and Shell. While 60% of the portfolio’s value is invested in large companies with a market capitalisation of over £5 billion, the remainder is invested in medium-sized and small companies. This can be associated with more risk. The trust has the ability to issue and buy-back shares and does so to control the trust trading at a wide premium or discount to net asset value. We think the UK is currently undervalued, and this could make a good addition to a portfolio in need of diversification away from US equities.
HICL Infrastructure
This trust aims to provide investors with a stable, sustainable income over the long term, along with some capital growth. It invests in infrastructure assets that are vital to communities, covering sectors like transport, utilities and healthcare. The managers look for investments with dependable cashflow, which are providing essential public services with limited competition. The majority of the trust’s assets are in the UK, with other investments in Europe, North America, and New Zealand.
We think in a high-but-falling inflation environment, infrastructure investments are worth considering as a small allocation in a portfolio to add diversification to equities and bonds.
The insights are contributed by Emma Wall, head of investment analysis and research, Hargreaves Landsdown.
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