14 years of the MoneyWeek investment trust portfolio

The MoneyWeek portfolio of investment trusts was created in June 2012 as an easy-to-follow, set-and-forget, all-weather portfolio. Investment trusts were chosen on the grounds of their long-term performance, flexibility, cost, as well as other factors such as their ability to use gearing and for investors to trade in and out of positions with relative ease.

The initial six holdings were chosen to cover a range of different strategies, with the aim of changing them as infrequently as possible. Over the past 14 years, there have only been six changes, with two of the original trusts still in the portfolio today. Our changes have added value about 50% of the time; that is to say, around half of them ended up generating worse returns than staying put. This is a valuable example of the benefits of not tinkering too much.

Overall, the portfolio has returned a satisfactory 248% (9.2% per year) in share-price terms, assuming no rebalancing between holdings (which may not be entirely realistic). The FTSE UK All-Share index has returned 5.2% per year over the same time, while US-heavy FTSE All-World index has returned 9.7%. Dividends would have further topped up returns, although this is not an income portfolio – the average yield (weighting each trust equally) is around 2%.

How our investment trust portfolio looked at the beginning

The original trusts were picked with diversification in mind, with each falling in a different sub-sector of the investment trust universe. Personal Assets (LSE: PNL) – still in the portfolio today – was selected for its emphasis on absolute returns, wealth preservation and a zero-discount policy, which made it the perfect “core defensive holding”.

At the other end of the risk spectrum, Scottish Mortgage (LSE: SMT) was the key “growth equity” in the portfolio. After a long run of market-beating returns, the trust also remains a core holding of the current portfolio.

Finsbury Growth & Income (LSE: FGT) was initially picked in 2012 for its focus on high-quality global businesses and a “disregard for benchmark strictures”. Lead manager Nick Train had a strong record in 2012, having outperformed the FTSE All-Share Index over the previous ten years.

BH Macro (LSE: BHMG) invests all its assets into the Brevan Howard Master Fund, a global macro hedge fund that had outperformed during the turbulent years of the 2008-2009 financial crisis. The thinking here was to include a trust whose “fortunes tend to be inversely correlated with the equity markets”.

3i Infrastructure (LSE: 3IN) was added as an “absolute return income-generating pick”. The trust was selected over some sector peers for its preference on “operating assets rather than contracts whose values will fall over time”.

Finally, RIT Capital Partners (LSE: RCP), chaired at the time by Jacob Rothschild, was “an old industry favourite”. It offered a diverse portfolio of public, private, hedge fund and real assets.

Changes to the investment trust portfolio

The first change came in a little over a year, when Caledonia Investments (LSE: CLDN) replaced BH Macro. In hindsight, BH Macro may have been a weak choice in the first place. Yes, it gave investors access to a type of investing that’s usually off-limits to those with less than £1 million of assets. However, hedge funds are expensive (BH Macro’s charges vary between 1.5% and 2% per annum depending on performance fees), and returns at the time did not justify that.

Caledonia is a family investment company, with a diversified, global portfolio and long-term outlook. It was added to the portfolio at a 20% discount to NAV. This is one of the trades that’s worked best. Since the portfolio was first constructed, BH Macro has returned 114% to the end of July 2026. By switching to Caledonia, the portfolio has earned a 124% return.

Late 2015 and early 2017 brought two more changes: the removal of 3i Infrastructure, replaced by Law Debenture (LSE: LWDB), followed by the sale of Finsbury Growth & Income for Temple Bar (LSE: TMPL). 3i Infrastructure was sold after management reset its target return objectives. Finsbury Growth was removed on valuation grounds – after gaining 98% in five years, the underlying holdings appeared expensive compared with the rest of the market.

Both Law Debenture and Temple Bar were selected for their low costs and contrarian, UK-focused value strategies. Law Debenture was trading at a 14% discount to NAV – a discount that has now all but disappeared. This turned out to be an astute decision: 3i Infrastructure’s share price has returned 118% over the 14 years, versus the 200% achieved by switching.

The Temple Bar position worked out less well. This holding was sold in May 2020 (at a loss of 42%) and replaced with Mid Wynd International (LSE: MWY) following the severe underperformance of UK value stocks (partly due to the effect of the pandemic) and the departure of manager Alastair Mundy. This meant the portfolio did not benefit from its strong recent returns under Ian Lance of Redwheel.

Mid Wynd was added as a “resilient, quality-growth global compounder to balance Scottish Mortgage” but failed to live up to expectations. It was removed in April 2025, after a change in management, and replaced by JPMorgan Global Growth & Income (LSE: JGGI). The inability to stick with one trust for this part of the portfolio has hurt returns. Switching from Finsbury to Temple Bar to Mid Wynd and finally JGGI produced a return of 65% to the end of July.

In comparison, even though Finsbury has drastically underperformed over the past five years, it has returned 142% since June 2012. Switching from Finsbury to Temple Bar and then sticking with that would have been an even better decision, with a return of 236%.

The final major change in the portfolio was the sale of RIT for AVI Global (LSE: AGT) in March 2023. RIT’s exposure to private equity and venture capital had increased from 24% in 2012 to 45%, which didn’t sit so well with the rest of the portfolio. Meanwhile, AVI’s “global value remit, exposure to family holding companies, discounted trusts, and Japanese equities” seemed attractive in comparison to the wider valuation of global markets. So far, the returns from both RIT and AVI have been fairly similar.

What could the investment trust portfolio look like in the future?

So what could the next 14 years hold for the portfolio? Are the six trusts still the right ones for today’s markets? What other trusts might work in a similar strategy?

Personal Assets is one of the best ultra-defensive plays around, helped recently by its exposure to gold. Its closest peers are Capital Gearing Trust (LSE: CGT) and Ruffer (LSE: RICA), both of which follow similar strategies to protect and grow capital in excess of inflation over the long term. The inflation spike in 2021-2023 and the timing of how markets adjusted to interest-rate hikes mean that Personal Assets’ returns over the last five years are lagging inflation. However, it is still ahead over ten years and back ahead over three.

While JGGI has hardly blown the lights out since it was added to the portfolio, previous trading suggests it would be a mistake to tinker further with this holding. This is the largest trust in the global equity income sector, with the best record and highest dividend yield (3.9%). It pays dividends out of both income and capital growth, with a target of 4% of NAV out every year. While in theory this means the payout could fall, management has so far avoided this by being overweight growth stocks. The approach gives it more flexibility than peers such as Murray International (LSE: MYI) or Scottish American (LSE: SAIN).

Law Debenture has by far the best record of any UK equity income trust over the past ten years, with a performance gap of around 100% over closest rival Temple Bar (although the latter has done well lately under its new manager). That’s partly because it is both an investment portfolio and a professional services business. The latter arm carries out mundane but essential tasks such as pension-scheme management, escrow services and paperwork for issuing corporate bonds. Income from this has generally met about a third of the trust’s annual cash dividend requirement.

That gives the managers flexibility to invest in both income and non-income-producing equities (ie, growth stocks). The approach is clearly working, but for investors who prefer a straightforward UK equity fund, there are many peers with a range of styles: Temple Bar, Aberdeen Equity Income (LSE: AEI), City of London (LSE: CTY), Edinburgh (LSE: EDIN), Fidelity Special Values (LSE: FSV), Merchants (LSE: MRCH) and Murray Income (LSE: MUT) to name a few. Note that Lowland (LSE: LWI) is run by Laura Foll and James Henderson, who look after Law Deb’s investments.

Caledonia’s shares have lagged the market over the last five years as its discount to NAV has remained stubbornly high, averaging 30% to 40%. The trust has tried to remedy this by splitting the stock to improve liquidity, buying back shares and pushing the dividend higher, but the big block of stock (48%) owned by the Cayzer shipping family clearly weighs on it. Still, we bought Caledonia as a family-controlled trust, liking it due to its mixed exposure to private equity funds, direct private company holdings and public equities. It is still one of the best in the space for this combination. The higher weight to direct investments still gives it the nod over its main peer RIT for our purposes.

Scottish Mortgage has been the portfolio’s biggest winner by far, with a return of 940% since 2012. The trust’s edge has been its ability to pick winners and act with conviction, something no other trust has managed to replicate with success across private and public markets. Yes, there has been some volatility along the way, as any shareholders who held through the 2021- 2023 peak-to-trough decline of nearly 56% will attest. However, the rewards from this style of investing don’t come without risks.

Finally, AVI Global. The reasons for adding this trust still stand. Its focus on value is highly attractive in what one might argue is a frothy market, and it offers significant exposure to Japan (23%). With look-through exposure to the US of just 13%, the fund has missed out on some of the recent tech boom, but it is intended to offer something very different to the global index. Peers Alliance Witan (LSE: ALW), Brunner (LSE: BUT), F&C (LSE: FCIT), and Monks (LSE: MNKS) may be simpler options for a one-stop global trust, but AVI’s blend of global value and activism remains attractive as a complement to the rest of our portfolio.

This article was first published in MoneyWeek’s magazine. Enjoy exclusive early access to news, opinion and analysis from our team of financial experts with a MoneyWeek subscription.