CAUTIOUS OPTION
Simon Elliott, head of research at WINS Research, suggests a global generalist portfolio with a strong track record. The shares of Gartmore Global Trust are ranked fifth out of  34 trusts in the Global Growth sector over three years to 30 May 2008. They have returned 80.71 per cent over that period, compared with a sector average of 51.45 per cent.

‘Brian O’Neill has managed Gartmore Global for 25 years and has a good long-term record through a stockpicking approach. Global Growth investment trusts have faced increasing competition for investors’ attention in recent years. However, in our opinion, well-managed investment trusts with a global equity mandate are still attractive.

Gartmore Global Trust is an attractive option for investors seeking long-term exposure to global equities. The manager has a good record over a variety of market conditions.

Following the repayment of its long-term debenture in August last year, the fund is ungeared and currently has net cash of six per cent. The manager does not
plan to use gearing in the foreseeable future, preferring to use his risk budget by increasing stock conviction. The portfolio is relatively focused, with 40 core holdings, normally representing 80 per cent of its assets. The trust’s mandate lends itself to being a core long-term holding, especially if held in a tax-efficient vehicle such as an ISA or SIPP. Furthermore, we believe the board’s active buyback policy means there
is little downside risk to the current discount level.’

BALANCED OPTION
Mick Gilligan, director of fund research at Killik & Co, highlights the attractions of a globally diversified portfolio of utility stocks. The shares of Utilico Emerging Markets Utilities are ranked fifth out of five trusts in the Global Emerging Markets sector over one year to 30 May 2008. They have returned 12.07 per cent over that period, compared with a sector average of 19.83 per cent.

‘The fund has an absolute return objective and seeks to minimise risk by investing predominantly in companies and sectors with the characteristics of essential services or monopolies. The managers look for undervalued investments, focusing on the developing markets of Asia, Latin America, Emerging Europe and Africa, but can invest worldwide. They will seek to invest where they see political stability, economic development, confidence in the legal framework and a positive attitude to foreign investment.

‘The key thing about this trust is the visibility of its income stream from governments
rather than the corporate sector. Governments have to continue to develop and support their utility infrastructures. But the added benefit is the emerging market focus, as if you take the view that sterling will weaken relative to emerging market currencies, that will give an extra boost to the portfolio. This may well happen, as one option open to emerging countries to deal with rising global inflation is to allow their currencies to appreciate.’

AGGRESSIVE OPTION
John Moore, head of the collective investments service at Brewin Dolphin, sees opportunities among the private equity trusts for more adventurous investors. The shares of Electra Investment Trust are ranked fifth out of 16 trusts in the Private Equity sector over three years to 30 May 2008. They have returned 67.01 per cent over
that period, compared with a sector average of 52.50 per cent.

‘I would suggest Electra as a company that would interest investors prepared to take a little more risk on the basis that private equity is out of favour at the moment.

‘This is largely because people think that private equity is done for. Now while that may well be the case with US private equity managers, who leverage their portfolios six- or sevenfold, that is not the approach adopted by the UK private equity trusts. Electra is a very high-quality manager, standing on a discount of 20 per cent, which, when you strip out its large proportion of cash, means it is closer to a 33 per cent discount to the underlying assets.

‘Electra has also made a disposal that will have a positive impact on its NAV. It
is one of the top three UK private equity players, and you don’t usually get such high-quality funds standing at such high discounts. So while it won’t be a great performer in the short term, it will be a good long-term investment to buy and tuck away.’