2025 Recommendations | Winterflood Research

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After an extremely difficult few years for investment trusts, the sector experienced another somewhat disappointing year for performance in 2024, with discounts remaining stubbornly wide, averaging 14.7% over the period and ending the year at 14.8% (vs 2.0% at the start of 2022). The investment trust sector delivered a positive share price total return of +8.7% over the year, slightly underperforming the broader UK market, with the FTSE All Share up +9.5% in total return terms.

Against this backdrop, 20 (or 54%) of the 37 funds we recommended during 2024 outperformed in share price terms against relevant comparator indices during their time on the list, with the same number of outperformers when compared with relevant peer groups. To kick off 2025, we have introduced 8 new names, while removing 9 funds from our recommendations list. As a consequence, the list now consists of 36 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 18.0%, with 23 of the names trading on double-digit discounts. We have retained our preference for larger and more liquid funds. The average market cap is £1.4bn, with no funds having a market cap below £100m. The average historical dividend yield of our recommended funds stands at 3.8%.

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