Bargain trusts for 2023 – and Scottish Mortgage outlook

TL;DR

Investment manager Peter Hewitt suggests that trusts invested in UK mid and small cap companies could perform well in 2023 as inflation and interest rates are expected to decline. He also recommends private equity trusts and highlights the potential for growth in technology and healthcare sectors.

Transcript

foreign Peter Hewitt manager of the CT Global managed portfolio trust which is an investment Trust of investment trusts and comes in both income and growth versions Peter thank you very much for coming into our studio yep we're heading into a new year it's almost 2023. what are your investment tips and are there any bargain trust that you've got yo... Read More

Key Insights

• ☠️ UK mid and small cap trusts may offer attractive opportunities when inflation and interest rates decline.
• ♑ Trusts exposed to the FT 250 mid-cap index, such as C Mercantile and Henderson Smaller Companies, have potential for strong performance.
• ❓ Equity income trusts and alternative investments like renewables and specialist property trusts can generate steady dividends.
• 🍉 Growth trusts focused on UK companies and structural growth in technology and healthcare sectors may provide long-term returns.
• 🌍 Private equity trusts, particularly HG Capital, offer exposure to software companies in Europe and are currently trading at wide discounts.
• 🥹 Scottish Mortgage Trust's long-term prospects and investments in high-growth private and public companies make it a worthwhile hold, despite recent performance challenges.
• 🥺 The departure of the lead manager, James Anderson, from Scottish Mortgage Trust is not a major concern as the current team has a strong track record and expertise in identifying high-growth opportunities.
• 🔠 Investment trusts managed by Peter Hewitt, including the CT Global Managed Portfolio Trust, have a unique feature in which the income and growth portfolios are separate but benefit each other through income and capital transfers.

Questions & Answers

Q: What types of trusts does Peter Hewitt recommend for investment in 2023?

Peter Hewitt suggests looking at trusts invested in UK mid and small cap companies, such as C Mercantile and Henderson Smaller Companies. He also recommends private equity trusts like HG Capital and growth trusts focused on technology and healthcare sectors.

Q: How does Peter Hewitt generate income in his portfolio?

Peter Hewitt primarily generates income through equity income trusts that are currently growing decently. He also has exposure to renewables trusts, specialist property trusts, and alternatives for steady dividend income.

Q: Which trust does Peter Hewitt consider as the best private equity trust?

According to Peter Hewitt, HG Capital is one of the best private equity trusts. It focuses on software companies in Europe that are business critical and has a strong growth record. Currently, it is selling at a wide discount.

Q: Why does Peter Hewitt still hold shares of Scottish Mortgage Trust even after a tough year?

Despite recent share price declines, Peter Hewitt is still holding shares of Scottish Mortgage Trust due to its long-term prospects and investments in high-growth private and public companies. He believes the trust may start performing better when interest rates begin to decline.

Summary & Key Takeaways

• UK mid and small cap trusts are currently at a wider discount but could perform well in the future when inflation and interest rates decline.

• Trusts exposed to the FT 250 mid-cap index, such as C Mercantile and Henderson Smaller Companies, have the potential for strong performance in the coming year.

• Peter Hewitt recommends equity income trusts for generating income, with some exposure to renewable trusts, specialist property trusts, and alternatives.

• Growth trusts that focus on UK companies and structural growth in technology and healthcare sectors may offer long-term returns.

• Private equity trusts, including HG Capital, that focus on software companies in Europe are currently trading at wide discounts and may offer attractive opportunities.