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Should you buy generalist or specialist?

Maintain a broad exposure when adding esoteric investment trusts
Should you buy generalist or specialist?
  • Many specialist non-equity trusts have launched over the past few years
  • These do not provide the core, broad exposure most investors should have 
  • If you hold these, it is probably best to have small allocations to them alongside broader funds

Over the past few years many investment trusts focused on non-equity, alternative assets such as renewable energy and niche property sub-sectors have launched. But while they might appear more interesting, you need to consider what role they can play in your portfolio or whether your investment goals could be met just as well or better by an older, broader trust.

Some of the larger trusts in the Association of Investment Companies (AIC) Global sector have exposure to areas other than mainstream equities. For example, Scottish Mortgage Investment Trust (SMT) had 19.5 per cent of its assets in unquoted companies at the end of September and F&C Investment Trust (FCIT) had 9.3 per cent of its assets in private equity at the end of June. But these and other large Global sector trusts are still largely focused on equities and are not going to give you the specific exposure to, say, wind farms, battery storage facilities or supermarket buildings that niche trusts will. Conversely, a handful of the latter will not give you anything like the broad exposure of a Global sector trust – the kind of core, basic exposure most investors should have.

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