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Investment trusts are traded like any other stock. I like them because they are a relatively easy way to get exposure to a large number of stocks. He Scottish Mortgage Investment Fund (LSE: SMT) is one of those trusts that I own for exposure to technology stocks.
I am considering adding the Blackrock Throgmorton Trust (LSE: THRG) to my portfolio to gain broad exposure to smaller UK companies. But it’s not just the stock portfolios that I can get exposure to by buying trusts. by possessing He Renewable Infrastructure Group (LSE: TRIG), I gain access to revenue and electricity generating assets in the renewable energy space.
UK Small Cap Stocks
the manager of Blackrock Throgmorton seeks the highest quality growth stocks in the UK small-cap space for its portfolio. The trust also takes short positions on companies that are likely to underperform, setting this trust apart from its competitors.
Performance has been good in the long run. Over the past 10 years, the trust has returned 252% versus 130% for its benchmark. However, last year BlackRock Throgmorton’s share price fell 38%. That was due to poor growth performance at a time of rising interest rates and inflation. A modest amount of leverage also amplified losses.
Using the Morningstar data, I can see that the estimated NAV per share of the trust is 631 pence. The Black Throgmorton Trust share price is around 612 pence. That means BlackRock Throgmorton’s portfolio is selling for around 3% less than it’s considered to be worth. And with that track record and some signs that inflation is coming down, I think he’s positioned to do well. I plan to start building a position this year.
Invest in renewable energy
He Renewables Infrastructure Group invests primarily in wind farms, but also in solar and battery storage assets in the UK and Europe. It generates income from the sale of electricity generated by these assets. Inflation should gently increase your income from existing operations over time. Additionally, the company continually seeks to add more revenue-generating assets.
The UK government’s windfall tax on electricity generators will drag down revenue in 2023 and 2024, possibly stalling dividend growth and putting pressure on share prices. But beyond 2024 I think dividend growth will return. And with the renewable energy industry showing no signs of slowing its growth, I’m happy to have it in my portfolio for the long term. Its stock price has grown 113% since 2013 and I hope it can repeat that kind of performance.
Scottish Mortgage Investment Fund
Scottish Mortgage invests in companies that bring transformative technologies, products and processes to market. It pursues high growth but remains long-term to realize it. Some of these investments are in unlisted companies, and generally the portfolio is rated a six on a seven-point risk scale based on company documentation.
That risk was highlighted last year when the company’s share price fell 45.7% as the market moved away from growth stocks. But the rewards can also be great. In the last 10 years, Scottish Mortgage’s share price has risen by 421%. As with BlackRock Throgmorton, if inflation subsides and interest rates stop rising, growth should return to being supportive, making Scottish Mortgage a solid choice in 2023 and beyond for my portfolio.
