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With a large number of investment trusts on the London market, it can take some time to sift through the options and decide what looks attractive.
This weekend, many investors’ minds may be focused on the end of one tax and year and the start of another, with ramifications for contributing to a Stocks and Shares ISA. As a new year’s ISA allowance beckons, here are two investment trusts for investors to consider.
Growth focus, with an impressive dividend history
Very few shares can claim not to have cut their dividend since the Wall Street stock market crash of almost a century ago. But that is the case with Scottish Mortgage Investment Trust (LSE: SMT).
Despite that stellar dividend record however, the focus of this trust is more on growth than income. While management recognises the importance of the dividend to some of its shareholders and has been growing it regularly, the trust’s yield is still below 0.5%.
The share price gain in recent years has been impressive however. It has moved up 68% over the past five years. In fact, that figure even includes a recent spell of underperformance, with the trust having lost a fifth of its value since the middle of February.
The reason for the long-term gain and short-term pain are the same as Scottish Mortgage is heavily exposed to growth stocks, which in many cases enjoyed large gains in recent years but have been struggling lately.
Case in point is the trust’s eighth largest holding, Nvidia (NASDAQ: NVDA). The chipmaker is down 24% so far in 2025, but still up 1,568% over a five-year timeframe.
Scottish Mortgage’s once large stake in Tesla is much reduced, now accounting for just 1.3% of assets. Its biggest holding is SpaceX.
With tech stocks struggling to justify their valuations as tariffs threaten trade, there is a risk that the Scottish Mortgage share price could keep falling too. It sells at a discount of 11% to net asset value already and if that discount deepens that could also hurt the share price.
But Scottish Mortgage takes a long-term approach to investment, as do I. I think its portfolio of leading tech shares mean it is worth considering.
Strong dividend focus
Some of the shares owned by Scottish Mortgage also appear in the portfolio of investment trust Henderson Far East Income (LSE: HFEL). For example, that trust’s biggest holding – Taiwan Semiconductor Manufacturing – is one of Scottish Mortgage’s top five holdings too.
But as its name suggests, Henderson Far East Income is focused on generating dividends. So while its dividend yield is currently a very impressive 11.8%, the share price performance is less impressive. Over five years, it has fallen 26%.
Unlike Scottish Mortgage, Henderson Far East Income sells at a premium to its net asset value, of 3%. That sort of high yield is never going to be without risks, as with any share. Henderson has a heavy exposure to Asian business performance, something that could mean lower income if global trade disputes escalate further.
Still, the investment trust focus includes trying to grow its annual dividend per share and it has managed to do that consistently in recent years.
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