The terrible events in Ukraine and the economic sanctions imposed in response have caused widespread disruption that is being reflected in the financial markets.
One area that has been affected is the investment trust sector, which includes some highly specialised mandates alongside more mainstream products. The performance since the eve of the invasion on the close of February 23 to close on Friday 11 March reveals a significant disparity of returns that can help investors to shape their portfolios going forwards.
According to data from Sharepad, the best performer over the period is Geiger Counter (LON: GCL) with a share price gain of 40%. This £75m trust invests in companies involved in the exploration, development and production of uranium to supply the nuclear power industry.
Uranium prices are up around 36% since the invasion because of the risk of sanctions on the Russian state-owned nuclear energy company Rosatom that supplies 42% of the global uranium refinement capacity. The US government is considering whether to ban uranium imports from Russia, but knows that countries will have to rely more on nuclear power now that gas and oil prices are so much higher.
Natural resources trusts experience strong gains
Other commodity-related trusts have also benefited from the supply shock with CQS Natural Resources Growth & Income (LON: CYN) up 16%, as is Golden Prospect (LON: GPM) on the back of the higher gold price, while Riverstone Energy (LON: RSE) has risen 14%. Despite the strong gains each of these trusts is still trading on a double digit discount.
The increase in power prices has benefitted some of the renewables trusts with Greencoat UK Wind (LON: UKW) up 12% to leave the shares trading on a hefty apparent premium. Interestingly the main anomaly in this area is Baker Steel Resources (LON: BSRT) whose portfolio of unlisted natural resources companies has fallen by six percent and is languishing on a discount to NAV of more than 20%.
It is a mixed bag amongst the UK All Companies investment trusts with the performance being driven by the stock selection decisions going into the crisis. Popular options like City of London (LON: CTY) and Nick Train’s Finsbury Growth and Income (LON: FGT) have held up pretty well with loses of two percent and six percent respectively, whereas the value-oriented Temple Bar (LON: TMPL) with a large weighting in BP is down 12%.
Defensives and those in the thick of it
As you would expect, the three multi-asset defensive trusts Personal Assets (LON: PNL), Capital Gearing (LON: CGT) and Ruffer (LON: RICA) have all withstood the fallout with gains of one percent, three percent and a loss of one percent respectively. They are all extremely well-diversified and intended to protect shareholders in all market scenarios.
The same cannot be said for the highly concentrated trusts with the largest exposure to Russia that have been hit extremely hard, with the biggest fallers being JPMorgan Russian (LON: JRS) and Baring Emerging EMEA Opportunities (LON: BEMO) with losses of 82% and 24%. Many China-focused portfolios have also suffered with JPMorgan China (LON: JCGI), Fidelity China Special Situations (LON: FCSS) and Baillie Gifford China Growth (LON: BGCG) down 18%, 13% and 12%.
China is one of Putin’s few allies and a major importer of energy, so has been badly affected by the increase in the cost of fossil fuels. Russia is also Beijing’s largest recipient of state sector financing with significant loans and export credits from Chinese institutions.