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Investment Trust Portfolio: Maintaining investment discipline

John Baron reflects on 2021 and the importance of portfolio discipline given expected volatility
January 13, 2022

Last year proved to be a challenging one. The Growth portfolio produced a total return of 12.6 per cent compared with 15.9 per cent for the MSCI PIMFA Growth index. Meanwhile, the Income portfolio returned 9.6 per cent compared with 10.4 per cent for the MSCI PIMFA Income index. As usual, all performance figures are calculated on a total return basis and portfolio figures include all costs.

The portfolios have always invested with the long term in view. While never complacent, total returns since their inception in 2009 have been 455.2 per cent and 303.8 per cent, which compares with index returns of 229.4 per cent and 165.9 per cent, respectively. Meanwhile, at year-end, the portfolios were yielding 2.8 per cent and 3.5 per cent, respectively. The tables below provide further detail.

For a variety of reasons, the investment trust sector in general lagged the market – rising just over 10 per cent compared with 17 per cent for the FTSE All World Index. Such occasional headwinds remind investors that short-term volatility is usually the price worth paying to benefit from investment trusts’ superior performance relative to indices and open-ended funds over time.

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