Investment trusts are one of the oldest forms of investment vehicles. The first British investment trust was the Foreign & Colonial Government Trust, launched in 1868 to allow investors to invest in a variety of foreign government bonds. It still survives today, as the Foreign & Colonial Investment Trust (Ticker: LSE: FCIT). The best investment trusts are remerging as one of the strongest performing categories of collective investments available to retail investors. In this article, we’ll help you discover which is the best investment trust in 2021. 

What is an investment trust?

Investment trusts are actively managed funds that use a closed-end legal structure with shares listed on a regulated exchange.

In words a layperson would easily understand, they’re publicly traded companies that have floated on the stock exchange, which uses its capital to invest in other investments rather than to carry out a business in its own right.

When the company raises new funds (primary share sale), it creates new shares and sells these directly to investors. The proceeds from these sales are invested by the company, allowing it to grow its assets and investors. 

When investors sell shares to each other via the London stock exchange, (secondary share sale), the proceeds merely pass between investors. The trust and its investment portfolio are not involved in the transaction. 

This is an important concept because it is a point of differentiation between investment trusts and open-ended products like cheap equity ETFs or OEICs. Open-ended funds allow for frequent trading between the fund and investors which allows the fund to grow or contract in accordance with demand.

In contrast, investment trusts rarely issue new shares or cancel outstanding shares. Therefore its investment portfolio could be compared to live music performance with a finite number of tickets on sale. If demand is high for a show, then the prices of the tickets might be bid up, and if demand is low for a particular date then the price of the tickets may be low – despite the fact that the scheduled show is precisely the same on both dates. This introduces an extra factor in the pricing of investment trust shares, known as the premium or discount. This represents the difference between the latest price of all shares outstanding and the reported value of the underlying investments held by the trust. 

How to invest in investment trusts

To invest in an investment trust, you’ll need to open an account with a stockbroker which will allow you to buy shares in investment trusts. We’ve shortlisted the best of the best UK stockbrokers below to help your search:

Please also see our Hargreaves Lansdown review, our AJ Bell review and interactive investor review.

The best investment trusts: how we have ranked

Choosing the best funds to invest in is almost an impossible task. In this article, we use several measures, including fund age, value, historical performance and reputation to shortlist notable investment trusts.

Disclaimer: Financial Expert articles should not be considered financial advice. If you feel you need suitable advice from a qualified and independent adviser under the oversight of the UK regulator, find a financial adviser. What follows is journalist research and information which was true at the date of writing. Please be aware that the financial markets continue to evolve and therefore information on this page could be out of date. We try to provide links to the websites of financial providers where possible to enable you to get live information where possible. 

The oldest UK investment trusts

It makes sense to begin at the beginning. Long-standing investment trusts can be attractive to cautious investors who prioritise the preservation of capital. Old investment trusts have demonstrated that through world wars, recessions and even great depressions, they have survived (and in some cases; thrived). Let’s look at the three oldest surviving UK investment trusts which are still listed on the London market today. 

1. Foreign & Colonial Investment Trust – 1868

Ticker symbol: FCIT

The Foreign & Colonial Investment Trust is a £5.9bn investment stalwart, dating back to an era in which foreign direct investment was a flight of fancy for all but the most organised and knowledgeable investors. 

Today, the Foreign & Colonial Investment Trust states that its objective is to “generate long-term growth and income by investing primarily in an international portfolio of listed equities. The Trust is highly diversified and cautiously managed.”

The trust benchmarks its performance against the FTSE All World TR Index, (TR stands for Total Return, i.e. inclusive of dividends). 

The trust is ultimately controlled by Columbia Threadneedle Investments, following the announcement of the sale of prior manager Canadian BMO that it would divest its European asset management business in April 2021. 

Visit the investment trust website for the latest information about the fund and its performance. 

2. Dunedin Income Growth Investment Trust PLC – 1873

Ticker symbol: DIG

The Dunedin Income Growth Investment Trust is the second oldest surviving investment trust on the London Stock Exchange. Founded in February 1873 as “The First Scottish”, the Dunedin vehicle, founded by Robert Fleming invested in US equities – an emerging market of its day.  

Today, the trust has firmly pivoted to UK and European equities, making it a complementary holding to the US-focused investment trusts which are ubiquitous in the growth-orientated end of the fund industry. 

The trust reported net assets of £448m in January 2021.

Visit the investment trust website for the latest information about the fund and its performance. 

3. Scottish American Investment Co plc – 1873 

Ticker: SAINT

The second trust on this list was co-founded by Robert Fleming, alongside Edinburgh legal mind William Menzies. The Scottish American Investment Co Trust has remained true to its original portfolio strategy, retaining a healthy allocation to US equities. 

However, in the modern-day, the geographical spread of its holdings has widened dramatically. The September 2021 fund factsheet reveals an Asian equity allocation of 15%, and its European equity portion of 32% slightly outweighs US equities by a single percentage point. 

The trust has net assets of £1 billion in Novemeber 2021. This wealth is managed by the mighty Baillie Gifford, a name that will feature prominently in this overall best investment trust article. 

Visit the investment trust website for the latest information about the fund and its performance. 

Best investment trusts for 1-year performance

Past performance is not a reliable indicator of future returns, but investors nevertheless look at the recent performance (particularly against benchmarks) to determine whether a fund manager has performed well with hindsight. 

As of November 2021, here are the highest performing UK investment trusts based on their share price performance over a single year. 

1. Fidelity Special Values plc – 72.20%

2. Henderson Opportunities Trust – 60.40%

3. Artemis Alpha Trust plc – 45.40%

4. JPMorgan Mid Cap Investment Trust plc – 44.20%

5. Schroder UK Mid Cap Fund plc – 42%

Single year period performance should not be evaluated in isolation. An asset class that crashed in one year can easily post spectacular returns in the next without even fully recovering to its original value. Therefore, sometimes the investment trusts which post extremely high returns have recently recovered from a market setback or heavy discount which had occurred before the starting date of the 12 month period. 

Best investment trusts for 5-year performance

For a longer-term picture, we can present the five best investment trusts by five-year share price performance. The percentage after the trust name is the cumulative five-year share price return to shareholders.

1. Henderson Opportunities Trust – 100.9%

2. Artemis Alpha Trust plc – 100%

3. Schroder UK Mid Cap Fund plc – 99.40%

4. Mercantile Investment Trust – 93.40%

5. JPMorgan Mid Cap Investment Trust plc – 79.10%

Each of these investment trusts has delivered a tremendous return for their lucky shareholders, however, the gods of the financial markets give no assurances that this performance will repeat itself. 

Given the double-digit growth figures in some of the best investment trusts, it comes as no surprise that investment trusts are some of the most commonly held investments by stocks & shares ISA millionaires.

The largest investment trusts

If you value safety in numbers, then you might seek out the largest investment trusts. Larger trusts can sustainably diversify across a large number of investments – although size doesn’t always correspond to diversity. The largest investment trust isn’t necessarily the best investment trust.

We’ve listed below every investment trust with over £1 billion in net asset value, ranked from largest to smallest. Quite staggeringly, even this long list represents a minority of the total number of investment trusts available on offer. 

Some of these UK trusts are REITs (real estate investment trusts), which we also cover in our guide to the best UK REITs.

Fund Name	Total Assets (m)
Scottish Mortgage Investment Trust plc	21,758.74
3i Group Plc	11,115.82
F&C Investment Trust	5,839.79
Tritax Big Box REIT Plc	4,746.02
RIT Capital Partners	4,658.64
Polar Capital Technology Trust	3,975.77
Alliance Trust PLC	3,904.16
Monks Investment Trust Plc	3,631.97
Greencoat UK Wind PLC	3,503.86
Smithson Investment Trust plc	3,287.64
HICL Infrastructure PLC Ord	2,966.93
Mercantile Investment Trust	2,804.67
Globalworth Real Estate Investments Limited	2,776.76
Worldwide Healthcare	2,658.89
The Renewables Infrastructure Group Limited	2,607.37
HarbourVest Global Private Equity	2,594.73
Caledonia Investments Plc	2,534.54
Templeton Emerging Markets Investment Trust TEMIT	2,510.99
International Public Partnerships Limited	2,456.90
3i Infrastructure Plc	2,346.25
Witan Investment Trust	2,303.17
Fidelity China Special Situations PLC	2,240.88
Finsbury Growth & Income Trust Plc	2,161.87
Pantheon International PLC	2,137.84
TR Property Investment Trust	1,922.62
Vietnam Enterprise Investments Limited	1,904.04
The City of London Investment Trust Plc	1,903.62
Sequoia Economic Infrastructure Inc Ord	1,882.65
Herald Investment Trust	1,817.46
Bankers Investment Trust Plc	1,757.86
Murray International Trust Plc	1,745.03
JPMorgan Emerging Markets Inv Trust	1,738.32
Personal Assets Trust	1,717.14
Fidelity European Trust PLC	1,676.71
UK Mortgages Limited	1,661.71
HgCapital Trust Plc	1,658.25
Aberforth Smaller Companies Trust Plc	1,575.63
JPMorgan American Investment Trust	1,568.99
Allianz Technology Trust Plc	1,562.94
Impax Environmental Markets Trust Plc	1,541.34
Hipgnosis Songs Fund Limited	1,511.45
Amedeo Air Four Plus Limited	1,467.20
UK Commercial Property REIT Limited	1,456.97
Edinburgh Worldwide Investment Trust Plc	1,436.35
AVI Global Trust PLC	1,358.95
Supermarket Income REIT plc	1,347.00
JPMorgan Japanese Investment Trust	1,336.05
Edinburgh Investment Trust Plc	1,294.67
Apax Global Alpha Ord	1,286.96
Octopus Titan VCT	1,282.04
Chrysalis Investments Limited	1,280.24
BMO Commercial Property Trust	1,275.47
Murray Income Trust Plc	1,272.15
NB Private Equity Partners Class A Ord	1,229.83
BlackRock Throgmorton Trust plc	1,217.69
BlackRock World Mining Trust plc	1,214.22
Syncona Limited	1,198.37
GCP Student Living PLC	1,189.33
BlackRock Smaller Companies Trust	1,181.78
BB Healthcare Trust PLC	1,177.25
Fidelity Special Values PLC	1,156.32
Baillie Gifford Japan Trust PLC	1,140.95
BMO Global Smaller Companies Plc	1,128.31
Law Debenture Corporation	1,122.88
LXI REIT	1,118.90
JPMorgan European Discovery Trust Plc	1,113.32
European Opportunities Trust plc	1,109.87
Baillie Gifford US Growth Trust plc	1,105.28
Henderson Smaller Companies Investment Trust	1,104.91
Schroder AsiaPacific Fund plc	1,102.28
GCP Infrastructure Investments	1,060.17
VinaCapital Vietnam Opportunity Fund Ltd	1,049.84
ICG Enterprise Trust Plc	1,043.75
BioPharma Credit PLC	1,021.98
Tritax EuroBox EUR plc	1,016.98
Scottish American Investment Company Plc	1,007.65

We hope you’ve found this best investment trusts article useful and that it has aided your research of what to invest in.