Top Picks for Investment Trusts for Inexperienced Investors
Investing for the first time can be an intimidating experience, but choosing the right investment trusts can help new investors build a diversified and relatively lower-risk portfolio. The Association of Investment Companies (AIC) has collated recommendations for the best investment trusts for beginner investors.
City of London Investment Trust (LON:CTY)
With a 100+ year history, City of London Investment Trust is managed by Job Curtis for 34 years. The trust focuses on good quality, well-managed companies, bought at reasonable share prices. It has increased its dividend for 20 consecutive years, offering beginner investors predictable income and stability through economic cycles.
Fidelity Special Values (LON:FSV)
Fidelity Special Values offers broader UK market exposure, including small and mid-cap companies. This diversification may benefit from market growth while remaining professionally managed.
Scottish Mortgage (LON:SMT)
Scottish Mortgage is a popular global equity trust often favored for its technology exposure and long-term growth focus. It is suitable for investors seeking capital appreciation in innovative sectors worldwide.
Greencoat UK Wind (LON:GRP)
Greencoat UK Wind provides sustainable income by owning operational UK wind farms, paying a dividend covered by earnings with a potential yield around 8.3%. Its income and inflation-linked growth appeal to beginners wanting reliable, growing returns from renewable assets.
Polar Capital Technology Trust (LON:PCT)
Polar Capital Technology Trust offers focused exposure to technology stocks, a growth sector. However, it remains suitable for beginners due to strong performance and professional management.
Long-term Proven Management and History
These trusts typically have long-term proven management and history, which helps reduce risk from market volatility.
Steady Income or Growth Potential
They offer either steady income through dividends or growth potential through sector/geographic focus.
Liquidity and Transparency
Investment trusts are traded like stocks on exchanges, providing liquidity and transparency.
Easy Access and Low Fees
Many are included in low-cost platforms offering easy access, such as AJ Bell, which provides tools and selects trusts based on price and performance to simplify choices for beginners.
For beginners investing with small amounts, using platforms like eToro, Trading 212, Moneybox, or Freetrade can facilitate buying these trusts or broad ETFs at low fees and minimums, which suits building diversified portfolios gradually.
Additional Recommendations
Scottish American Investment Company seeks out companies with dependable income and the potential for inflation-beating profit growth. Murray International Trust focuses on achieving long-term returns that outpace inflation. Alliance Witan uses an unusual approach to portfolio construction, where several external fund managers are asked to pick around 20 of their best stock ideas. Capital Gearing Trust is a solid choice for cautious beginner investors due to its heavy weighting towards bonds.
In summary, these top trusts combine longevity, income stability, growth potential, and professional management, making them well-suited for beginner investors who seek diversified, relatively lower-risk exposure within the UK and global markets.
- The City of London Investment Trust (LON:CTY), with a management history spanning over 100 years, invests in good quality companies and has increased its dividend for 20 consecutive years, providing predictable income for beginners.
- Fidelity Special Values offers broader UK market exposure, including small and mid-cap companies, and may benefit from market growth while being professionally managed.
- Scottish Mortgage, a popular global equity trust, offers technology exposure and long-term growth focus, making it suitable for investors seeking capital appreciation in innovative sectors worldwide.
- Greencoat UK Wind provides sustainable income by owning operational UK wind farms with a potential yield around 8.3%, appealing to beginners wanting reliable, growing returns from renewable assets.
- Polar Capital Technology Trust offers focused exposure to technology stocks, a growth sector, and remains suitable for beginners due to strong performance and professional management.
For additional recommendations:- Scottish American Investment Company invests in companies with dependable income and the potential for inflation-beating profit growth.- Murray International Trust focuses on achieving long-term returns that outpace inflation.- Alliance Witan uses an unusual approach to portfolio construction, asking multiple external fund managers to pick their best stock ideas.- Capital Gearing Trust is a solid choice for cautious beginner investors due to its heavy weighting towards bonds.
These top trusts combine longevity, income stability, growth potential, and professional management, making them well-suited for beginner investors who seek diversified, relatively lower-risk exposure within the UK and global markets.
