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Investment trusts - look to the US, and value in particular

This month's investment trust screen has a distinctly North American feel to it
Investment trusts - look to the US, and value in particular


  • US focused funds shine through in our screen
  • With value also a strong theme running through our selection
  • Several of which are in the sights of activist investors, suggesting changes of fortunes are coming

It’s been a turbulent month since the last Alpha report but the 10 trust picks from February managed to avoid the worst of the carnage. Overall the trust picks produced some modest outperformance of the FTSE All-Share index and usefully beat the MSCI World index. The general volatility of the market means readers are highly encouraged to check the price of the trusts mentioned in this report once it is published as in some cases they could vary significantly from prices at the time of writing (all performance data used to monitor the portfolios relates to prices at close of play on publication day).

Go USA! 

The big theme emerging from this month's report is North America. UK small caps also feature strongly again for the third report in a row. The comments from last month’s report about the UK theme still apply and can be read via this link.

Given how important the US market is in global indices, North America is surprisingly under-represented by investment trusts. Indeed, totalling only eight, the number of North American trusts on offer is equal to the number targeting UK residential property - a rather more niche area. 

For over a decade, value investors have done poorly in the US compared with their growth-focused counterparts. However, recently all that has changed, and the four North American trusts highlighted by this month’s Alpha report should be seen in that context.

Indeed, while there has been much talk about sharp falls by US stocks over the last month, not everyone is suffering. 

The accompanying chart tells the story. It tracks the total return from the S&P 500 as well as the Growth and Value versions of the index. The divergence in performance between growth and value since mid-February has been quite striking with the S&P 500 Value index striding higher whilst the Growth index has taken some savage beat downs. 

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