2016-04-20

In a financial world of short-termism investment trusts are reassuringly old, with a large number equalling or exceeding the Queen’s 90 years.

On the 21st April the world’s oldest reigning monarch and Britain’s longest reigning monarch, Queen Elizabeth II, celebrates her 90th birthday. She shares her birthday year with Finsbury Growth & Income and Temple Bar (we’re confident she’ll be excited about this too).

According to the AIC (Association of Investment Companies), 27 investment trusts (that’s 10%) equal or exceed 90 years, with the oldest, Foreign & Colonial, pre-dating her parents reign having being established when Queen Victoria was on the thrown back in 1868.

John Newlands, head of investment trust research at Brewin Dolphin, and having written several books on the sector is a sage of all things investment trusts, wrote about the 1920’s, the decade in which the Queen was born in his book ‘Put Not Your Trust In Money’.

History buffs and investors alike will be interested to learn that in the early part of the last century (and before), equities tended to be eschewed by investment trusts in favour of Bonds. John Newlands writes: “It is essential to realize that investment, until the turn of the 20th century, and beyond, was all about income, rather than capital growth.  Interest rates were low, and inflation negligible…investors had very few options….” This looks eerily similar to the economic situation we find ourselves in today.

The book continues “many investment trusts were starting to shift the balance of their investments away from purely fixed interest portfolios and into equities.”

Some of these names of the shares the early trusts were investing in will not be familiar to us today. For example, Foreign & Colonial Investment Trust’s first equity investments included ‘Liebig’s Extract of Meat’, ‘Texas Gulf Sulphur’, and ‘Swedish Match’, who are still in business today and listed in Stockholm, though no longer a holding in the F&C portfolio.

Foreign and Colonial Investment Trust is the oldest investment trust in the world, having reached the dizzy age of 148. Its original aim was to help the ‘investor of moderate means’ have ‘the same advantage as the large capitalist in diminishing risk in Foreign & Colonial stocks by spreading the investment over a number of stocks’.

However, as well as the Queen’s 90th birthday, 2016 also sees the 90th anniversary for both Finsbury Growth & Income and Temple Bar.

Finsbury Growth & Income was launched on 15 January 1926 as the Scottish Cities Investment Trust, and remains Scottish domiciled today, despite being managed from London. By 1958 Finsbury Growth & Income had net assets of approximately £1m, which grew to £3.3m by 1968 and to £24m by 1990. The net asset value now exceeds £780m (as at end of March 2016).

Temple Bar, which is managed by Alistair Mundy (we interviewed him recently and you read that here), was launched in 1926 as The Cable, Telephone and General Trust Company Ltd, and since then has confronted the Great Crash of the 1930s, the inflationary 1970s and subsequent periods of equity market strength and weakness. Today, its total assets are over £800m (as at end of March 2016).

Fit for a Queen: Investment Trusts aged 90 years and more

Investment Trust

Management group

AIC sector

Total assets (£m)

Launch date

Foreign & Colonial Investment Trust

F&C Management

Global

£2,878

01/01/1868

Scottish American

Baillie Gifford

Global Equity Income

£435

31/12/1873

Dunedin Income Growth

Aberdeen Asset Managers

UK Equity Income

£435

01/02/1873

JPMorgan American

J.P. Morgan Asset Management

North America

£899

18/06/1881

Mercantile

J.P. Morgan Asset Management

UK All Companies

£2012

08/12/1884

Scottish Investment Trust

Scottish Investment Trust

Global

£791

27/07/1887

Henderson Smaller Companies

Henderson Global Investors

UK Smaller Companies

£570

16/12/1887

JPMorgan Overseas

J.P. Morgan Asset Management

Global

£298

21/04/1887

Alliance

Alliance Trust

Global

£3,244

21/04/1888

Bankers

Henderson Global Investors

Global

£765

13/04/1888

Merchants

Allianz Global Investors

UK Equity Income

£605

16/02/1889

F&C Global Smaller Companies

F&C Management

Global

£565

15/02/1889

Law Debenture Corporation

Law Debenture Corporation

Global

£732

12/12/1889

Edinburgh Investment

Invesco Asset Management

UK Equity Income

£1,576

01/03/1889

City of London

Henderson Global Investors

UK Equity Income

£1,334

01/01/1891

BlackRock Income Strategies

BlackRock Investment Management (UK)

Flexible Investment

£420

05/01/1898

British Empire

Asset Value Investors

Global

£748

01/01/1898

TR Property

Thames River Capital (UK)

Property Securities

£1,156

05/05/1905

Witan Pacific

Witan Investment Services

Asia Pacific - Including Japan

£173

30/12/1907

Murray International

Aberdeen Asset Managers

Global Equity Income

£1,335

18/12/1907

Witan

Witan Investment Services

Global

£1,784

17/02/1909

Scottish Mortgage

Baillie Gifford

Global

£3,792

01/01/1909

London & St Lawrence

London & St Lawrence

Global Equity Income

£101

07/03/1910

Hansa Trust

Hansa Capital Partners

Global

£251

01/01/1912

Murray Income

Aberdeen Asset Managers

UK Equity Income

£536

07/06/1923

Finsbury Growth & Income

Frostrow Capital

UK Equity Income

£786

30/12/1926

Temple Bar

Investec Asset Management

UK Equity Income

£859

30/12/1926

Commenting on the longevity of investment companies John Newlands, Head of Investment Trust Research at Brewin Dolphin Ltd said: “The fact that a number of investment trusts had already been operating for decades when the Queen was born – and continue to trade today – shows that far from being old-fashioned, they have evolved and improved with the times. If they hadn’t they would have faded away, as have so many once famous large UK companies from Marconi to Woolworths. I would add that the long-term compound investment returns of many of these veteran investment trusts are not to be sneezed at, either.”

Annabel Brodie-Smith, Communications Director at the Association of Investment Companies said: “It is a testament to the sector that 10% of investment companies have been around for the 90 years since the Queen was born or in many cases a good deal longer. Investment companies have weathered wars, booms and busts and they are still continuing to deliver strong long-term performance to their shareholders today. Long-term investing doesn’t get much more long-term than this.”

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