The top investment trusts for novice investors

The top investment trusts that novice investors should think about adding to their portfolios are highlighted by experts

With their vast array of investment options, investment trusts are an excellent way for novice investors to make their money work harder for them in the long run.

Investment trusts are an intriguing concept for anyone just starting out in investing. From how various trusts use gearing to whether or not to worry about discounts, there appears to be a lot to learn.

However, the basic principles of investment trusts are fairly straightforward for novice investors. They are a type of active fund that, like stocks, trades on stock exchanges. In actuality, they are stocks, and every investment trust is a separately listed business.

"Many investment trusts have a long history of protecting and increasing the value of people's savings, and they offer diversified portfolios," says Nick Brotton, research director at the Association of Investment Companies (AIC), a trade association that represents almost 300 investment trusts.

Whether you're looking for growth, income, or a combination of the two, he continues, "many trusts make great first-time investments."

The AIC has created a list of the top investment trusts for novice investors by compiling the advice of numerous experts in the investment sector.

Beginner-friendly UK investment trusts.

Beginner investors may want to include one of these in their portfolio if they wish to use investment trusts to increase their exposure to the UK market.

London's City Investment Trust.

One of the AIC's dividend heroes is City of London (LON:CTY), which has experienced annual dividend increases for 20 years running.

Hargreaves Lansdown's head of platform investments, Emma Wall, says the fund has been around for more than a century and has been managed by Job Curtis for 34 years. He has a preference for "good quality, well-managed companies, bought at reasonable share prices."

According to Paul Chilver, director and financial planning manager at Birkett Long IFA, "a new investor may want to consider an investment trust with a long track record and a manager who has been at the helm through many economic cycles,". Both of these are satisfied by the City of London Investment Trust.

According to Chilver, novice investors would find comfort in the City of London's emphasis on renowned FTSE 100 stocks.

Special values of fidelity.

Beginners looking to invest in the UK stock market might want to look into Fidelity Special Values (LON:FSV).

"The FTSE 100's big blue chips have led the UK stock market's performance this year," stated Laith Khalaf, AJ Bell's head of investment analysis. This trust has a greater chance of profiting than the majority of broad UK stock market funds, including index trackers, if small and mid-cap stocks begin to rise.

International investment trusts for novices.

These are the recommendations made by experts for international investment trusts.

Scottish American Investment Company.

Wall describes Scottish American (LON:SAIN) as "a great one-stop-shop trust for those with an appetite for risk, investing predominantly in global equities but with a small allocation to bonds, property, and infrastructure."

Its managers, Ross Mathison and James Dow, look for businesses that have the potential to grow profits at a rate that beats inflation and provide consistent income.

"They also need to show resilience through the economic cycle," Wall said, adding that the trust has been raising dividends for over 50 years, making it a dividend hero.

FandC Investment Trust.

F&C (LON:FCIT) is a good option for novice investors looking for a wide play on the international stock market.

According to Richmond Investment Managers senior adviser Philippa Maffioli, "it offers access to a very broad and well managed portfolio, delivering steady long-term capital growth alongside an attractive dividend income."

International Trust Murray.

Maffioli also suggests Murray International Trust (LON:MYI) to novice investors.

She states that the trust's primary goal is to provide investors with a solid foundation for the future by generating long-term returns that surpass inflation.

Witan Alliance.

The investment trust with the best performance over the past ten years on this list is Alliance Witan (LON:ALW), which has yielded ten-year returns of 219 percent.

Its portfolio construction method is unique in that it asks a number of outside fund managers to select about 20 of their best stock recommendations.

According to Kyle Caldwell, editor of funds and investment education at Interactive Investor, "the outcome is a portfolio of over 200 stocks, covering a wide range of countries and sectors." Alliance Witan provides investors with a globally diversified portfolio of shares for those who are willing to assume a little bit more risk.

Investment Trust Brunner.

Growth-oriented Brunner Investment Trust (LON:BUT) provides "a modest but steady dividend," according to Maffioli.

"Brunner is a good choice for individuals who are just starting out in investing because of its resilience and consistency under the seasoned leadership of Julian Bishop and his team," she continues.

An introduction to capital preservation investment trusts.

Novice investors may wish to exercise greater caution when handling their funds, particularly if they are starting out with primarily cash savings. For novice investors who wish to protect their capital, these two trusts are good options.

Personal Assets Trust.

For novice investors, three specialists Wall, Khalaf, and Chilver suggested Personal Assets Trust (LON:PNL).

Chilver stated, "It has a long track record of protecting investors' money during periods of stock market volatility with high exposure to government bonds and gold."

Wall draws attention to managers Charlotte Yonge and Sebastian Lyon's emphasis on protecting investors' capital, while Khalaf especially appreciates the harmony between these defensive assets and top-notch businesses.

"This trust is not only a good option for novice investors, but it can also serve as a buffer for more established equity-biased portfolios," Wall continues.

The Capital Gearing Trust. .

Because Capital Gearing Trust (LON:CGT) has a significant bond weight, it is a good option for cautious novice investors.

Caldwell stated that "looking for funds that offer plenty of diversification is a sensible start for those dipping their toes into the stock market for the first time as it helps to keep a lid on risk." One option is Capital Gearing, which allocates a third of its portfolio to risky assets like stocks, a third to corporate and short-dated government bonds, and a third to index-linked bonds.