While the case for the latter is debatable, what about a more significant milestone, what about a 150-year anniversary? That is what the Foreign & Colonial Investment Trust is set to mark this year, having launched way back in 1868.
First up, a bit of history. Victoria was sat on the throne, Benjamin Disraeli was prime minister (having succeeded the Earl of Derby in late February), while Andrew Johnson became the second US president to be impeached.
At the same time Foreign & Colonial set out to raise £1m in a new collective investment scheme known as the investment trust. Some two world wars, one great depression and a technology boom and bust later, it has lived to tell the tale and is still going strong with assets under management (AUM) today close to £3.5bn.
Performance
Today there are 389 investment companies in existence, with total AUM hitting £174.4bn at the end of last year. A number of these funds also have track records dating back over 100-years, so how have they performed over extended periods of time?
According to the Association of Investment Companies (AIC), over 35 years to the end of December 2017, an investment in the average investment company is up 5,662%. So does this compare to the average open-ended fund, a perennial favourite exercise of the industry? Well it fares well for the closed-ended industry, with the average open-ended fund up 2,824% over the same time period.
This fits with recent research from Winterflood Investment Trusts (Wins) which found that the ability to gear and stay invested in rising markets has led the vast majority of investment trusts to outperform their comparable open-ended peers, especially over longer time periods.
Wins identified a number of equity investment trusts that have comparable open-ended funds, run by the same manager and with the same investment strategy. The result was a list of some 67 closed and open-ended funds that could be considered comparable over one-year, 56 over three years and 46 over five.
Over 12 months to 30 November, 79% (53 out of 67) of investment trusts outperformed their open-ended counterparts in net asset value terms, rising to 88% (59 out of 67) when compared in share price terms. Over three years the percentage of outperformance fell, with 71% of trusts doing better in NAV, falling to 59% in share price terms. This number increased over five years, jumping to 76% (35 out of 46) of outperforms in NAV terms and 80% in share price terms.
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