Fund Spotlight: one-stop shop a consistent performer

There are certain steps that can greatly increase the chances of investment success. Among the golden rules to follow are to think long term and hold one’s nerve during periods of turmoil.

Many funds and investment trusts have overseen and recovered from various crises but none more so than the UK’s oldest investment trust, F&C Investment Trust Ord (LSE:FCIT), which launched in 1868.

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While the world has changed a lot over the past 150 years, a parallel can today be drawn with US President Donald Trump’s tariff policies, which have caused repeated equity market volatility. In the last era of such elevated tariffs in America, the outgoing Democrat had passed the 1861 Morrill Tariff act, which aimed to protect manufacturers from foreign importers and to generate revenue to fund the Civil War. This ushered in a “restrictive” period for US trade, which lasted well into the 20th century, and concerns of its repetition are a severe preoccupation for investors across asset classes.

Despite the trade policy comparison, the world of the 1860s feels devoid of familiarity today. But when we think of those sustaining companies that endured the century and a half since then, a remarkable number remain including F&C Investment Trust, which was incepted (albeit with a different mandate to its current one) as “The Foreign & Colonial Government Trust”.  It launched with the purpose of “bringing stock market investing to those of moderate means”. The trust invested in 18 “foreign and colonial” government bonds.

Today, it is the UK’s largest multi-manager trust, which seeks to grow both capital and income by investing in global equities. It is managed by Columbia Threadneedle, with Paul Niven at the helm. Niven decides on the asset allocation and gearing level.

What does the fund invest in?

F&C Investment Trust takes a multi-manager approach to investing actively in global equities, with an aim of achieving both capital and income growth over the long term through a well-diversified portfolio. More than 400 companies are held. The trust invests across predominantly listed equities, but may also allocate to unlisted companies both via collective investments as well as by direct positions, typically within the range of 10-15% (now just over 10%).

Niven is supported by Columbia Threadneedle’s multi-asset and manager selection teams. The investment process begins with asset allocation, before considering areas where a more tactical approach may add value. Allocation decisions manifest with delegation of regional management to fund managers (internal and external) who invest in a concentrated set of stocks.

The geographic allocation is currently not too dissimilar to its FTSE All-World benchmark. Namely, the US allocation of 63% is in line with the benchmark (64%). While accepting the hurdles of higher valuations and tariff risks, Niven believes that the supposed downfall of American exceptionalism may be overblown and touts the superior earnings growth consistently found in the US. An area of overweight is the UK, which at near 10% of the portfolio is far higher than the benchmark (circa 3%), and unsurprisingly this allocation has contributed meaningfully to income generated within the portfolio.

While global equity market returns in the past two years have been driven by a small set of mega-cap companies, Niven and his sub-managers do not necessarily shy away from these names, with each approached on their own merits. NVIDIA Corp (NASDAQ:NVDA) is F&C’s largest holding at 5.1% of the portfolio (vs 4.8% for benchmark), although generally exposure to the rest of the Magnificent Seven is underweight and F&C’s top holdings are less concentrated than those of its capitalisation-weighted benchmark.

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Niven also defines the stylistic composition of the portfolio, and historically has blended growth, value and quality characteristics to avoid stylistic concentration and manage the trust through economic cycles. While internal mandates can keep costs down, Niven is able to freely select managers depending on their areas of strength and expertise. For example, in the US allocation, F&C has employed a blend of growth and value via JPMorgan (exposure to growth stocks), with Barrow Hanley (a US manager providing value exposure). A recent change has included the decision to outsource the emerging markets allocation away from Columbia Threadneedle to Invesco.

The trust can borrow in an attempt to enhance returns to investors. It has secured relatively cheap and long-dated facilities, with a current level of around 5%.

How has the trust performed?

In net asset value (NAV) terms, which is the performance of the underlying investments, over the past five years F&C has kept pace with the strong returns from its benchmark index. It has marginally outstripped the return of its closest multi-manager peer, the now-merged Alliance Witan Ord (LSE:ALW) investment trust. In share price terms, performance is even more positive given a narrowing of the discount over that time period.

Source: Morningstar Total Returns (GBP) to 31/07/2025. Past performance is not a guide to future performance.

Performance impressed in 2022, when global equities (FTSE All-World) returned -7.3% and shareholders of F&C saw a drawdown of just under -1% in share price terms. This was in part thanks to the aforementioned ability to manage stylistic exposures through economic conditions. Moreover, a favouring of value stocks going into the year where growth so greatly underperformed served investors well.

Why do we recommend this fund?

F&C is a compelling option as a one-stop shop for equity exposure, given its blend of investment styles and diversified exposure to best-in-class managers across listed equities and modest exposure to unlisted assets. Niven is an experienced manager at the helm of an historic company that has served investors well during his more than a decade of tenure and over the long run.

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F&C has a record of impressive investment growth and increasing dividends year on year for more than half a century. With a modest yield of around 1.3%, the dividend forms a small but historically consistent component of FCIT’s overall total return.

Thanks to F&C’s substantial scale at over £5.5 billion in assets (a member of the FTSE 100), as well as its tiered fee structure, an ongoing charge of 0.45% is very competitive versus peers. It helps dispel the notion that multi-manager approaches or unlisted exposure is always expensive for investors.

This fund can be found on ii’s Super 60 list of investment ideas. The latest factsheet can be viewed here.