2024 Recommendations | Winterflood Research

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After an extremely difficult year in 2022, when the Investment Trust universe delivered a total return of -16.6% vs +0.3% for the FTSE All Share, the sector generated another relatively disappointing performance last year, albeit to a lesser extent. During 2023, discounts continued to be impacted by heightened investor caution over the first three quarters, before the sector staged a notable recovery in Q4 as expectations of major economies having reached peak rates set in. This led to a share price total return of +4.9% over the year, underperforming the broader UK market, which was up +7.9%.

Against this backdrop, only 10 (or 29%) of the 34 funds we recommended during 2023 outperformed in share price terms against relevant comparator indices during their time on the list. The number of outperformers rises to 20 (or 59%) when compared with relevant peer groups. To kick off 2024, we have introduced 15 new names, while removing 12 funds from our recommendations list. As a consequence, the list now consists of 37 names and can be broadly characterised as funds with proven managers, strong long-term performance records, defensive characteristics and/or downside protection, and funds that offer a value opportunity.

We estimate that the average discount of our recommended funds is 15.1%, with 21 of the names trading on double-digit discounts. We have retained our preference for larger and more liquid funds. The average market cap is £1.2bn, with no funds having a market cap below £100m. The average historical dividend yield of our recommended funds stands at 3.3%.

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