It has been hard going for investors in Scottish Mortgage whose shares have halved from the recent all-time high, yet whenever these sorts of setbacks have happened in the past it has always managed to bounce back strongly.
Funds and Investment Trusts
It has been a brutal few month’s for Terry Smith’s popular investment trust with the sharp increase in bond yields undermining its growth-oriented holdings, but the managers are sticking to their long-term approach.
It has been a brutal few months for many growth-oriented trusts including in the UK smaller companies sector, with the sell-off giving longer term investors the chance to pick up a few bargains.
The music royalties investment trust has built up a varied portfolio of vintage catalogues, which provides a diversified source of income that is uncorrelated to the financial markets.
Middlefield Canadian Income is heavily invested in pipelines and energy, real-estate, financials and renewable power generation, it also enjoys a favourable economic backdrop with Canada being a net exporter of oil and gas.
Annual inflation as measured by the Consumer Prices Index is forecast to hit seven percent this year, so is it realistic for the core infrastructure investment trusts to keep pace?
A number of listed private equity funds have recently reported impressive results for 2021, yet their share prices have fallen as volatility has increased, creating an attractive potential entry point.
With central banks beginning to tighten it looks as though this period of easy money is coming to an end, which makes some of these sources of yield extremely vulnerable, whereas others are likely to thrive.
It looks like we may be entering a period of stagflation, with higher inflation and slowing economic growth threatening to undermine the markets, which would be an environment that demands effective diversification.
The natural resources investment trust has benefitted from the increase in commodity prices with the surge in earnings supporting a bumper yield of six percent.