Bad news about global conflict is good news for shares in this investment trust, which is benefiting from Europe’s rush to re-arm with new technology led by space-tech. While doubts remain about where Britain will find the money to honour outgoing Prime Minister Keir Starmer’s promise to spend more on defence, the direction of travel remains clear.
Energy is the economy and investors aiming to build a diversified portfolio of shares in the present and future should consider some exposure to this sector. Sad to say, violent conflicts and recent restrictions on the supply of oil and liquefied natural gas (LNG) from the Middle East and Russia demonstrate the fundamental importance of energy.
More than 80% of international trade by volume and 70% by value is transported by sea. Few investors can participate directly in shipping but investment trusts make it convenient and cost-effective to do so. Step forward Tufton Assets (stock market ticker: SHPP for sterling shares, SHIP for dollar-denominated stock), a second-hand marine leasing specialist that has delivered a high and rising income, earning its place as the most valuable asset in my Isa.
More than a decade after Britain voted to leave the European Union, many investors should consider Continental economies’ scope to deliver capital growth and income. France, Germany and Switzerland are home to many world-leading businesses, ranging from biotechnology and healthcare to digital hardware and luxury brands.
Never mind the generalities, my holding in JPMorgan European Growth and Income (JEGI) gives me access to a business few folk have heard of but which makes the machines that make microchips – or, more formally semiconductors – that go into almost everything these days. ASML, a Dutch company, is the top holding in JEGI.
That exposure to artificial intelligence and all things digital helped put this fund at the top of the Association of Investment Companies (AIC) ‘Europe’ sector over the last decade, five-years and one-year periods. Total returns were 264%, 105% and 27%, respectively.
A fundamental aim of stock market investment is to own a stake in tomorrow’s economy. To borrow an analogue age analogy, yesterday’s river grinds no flour. So some exposure to new technology is necessary, even if – like me – your cerebral software dates back to the 1950s.
Even the best shares go through periods of bad performance which can provide good buying opportunities. That’s what happened when stock market setbacks gave me a second chance to get onboard a brilliant investment trust I really should have bought into years ago. But it was a bitter-sweet moment because this also involved selling out of another fund I had intended to hold forever.
Regular readers may have guessed that I am talking about
Double-digit income with dividends rising rapidly were the principal attractions of Greencoat UK Wind (stock market ticker: UKW) when I invested and this fund is still yielding over 9.8% at pixel time, as I write this. Despite already yielding more than 10% per annum, this £4 billion investment trust could double shareholders’ income if it can sustain its 7.8% annual average rate of increase over the last five years.
Against all that, it is important to remember that dividends are not guaranteed and can be cut or cancelled without notice. Also, almost unbelievably, regardless of renewables’ ability to deliver energy independence from foreign dictators, our homegrown politicians seem determined to increase taxes on this sector.
If emerging markets aren’t exciting enough for you, how about some professionally-managed exposure to even newer and/or smaller so-called ‘frontier markets’? Better still, whereas investors in emerging markets and – even less developed and more volatile – frontier markets used to have to pin everything on hopes of capital growth, some investment trusts focussed on these sectors now yield inflation-busting income, too.
That’s why I added a new holding to my forever fund last year by buying shares in BlackRock Frontiers (stock market ticker: BRFI), the £384m fund where nearly 22% of the underlying assets are invested in Saudi Arabia and the United Arab Emirates (UAE).
Nobody ever forgets their first ten-bagger or share whose price soared 10 times or more after we bought. That’s why the fund now known as JPMorgan India Growth and Income (stock market ticker: JIGI) will always be close to my wallet.