Ian Cowie: how my ‘forever fund’ fared in a Q1 to forget

Seven out of 18 investment trusts held by our columnist managed to avoid losing money in the first three months of 2025. Here, he runs through the winners and losers.

3rd April 2025 10:10

Ian Cowie from interactive investor

Long before talk of “Liberation Day” and American tariffs put the frighteners on global stock markets, the first quarter of 2025 saw a brutal re-rating among investment trusts in my “forever fund”. Former high-flyers fell to earth as technology shares blew a fuse, but one long-forgotten fund returned to favour.

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Let’s start with the losers because I know that some of you enjoy them more than my winners. Edinburgh Worldwide Ord (LSE:EWI) is the stand-out stinker in a rotten Q1, turning £1,000 at the start of this year into just £827 at the end of last month. Ouch!

This £675 million global smaller companies specialist has 11% of its money invested in Elon Musk’s SpaceX, which has lifted more than 7,000 Starlink satellites into orbit. That helped SpaceX - which is not listed on any stock exchange - achieve an eye-stretching $350 billion (£266 billion) valuation in a private equity funding round last year.

Sad to say, SpaceX seems to be an example of “up like a rocket, down like a stick” as Mr Market flipped from excessive exuberance to despair. EWI followed suit and has shrunk shareholders’ capital by 9% over the past five years but remains 8% up over the last year. Boring it ain’t.

JPMorgan US Smaller Companies Ord (LSE:JUSC) is another fund focused on middling to minor businesses that enjoyed some popularity last year on hopes that less regulation and lower taxes would boost revenues and profits. Now that doubts are growing about US president Donald Trump and his strategies for growth, JUSC’s shares are shrinking, turning £1,000 three months ago into £845 by the end of March.

Meanwhile, India Capital Growth Ord (LSE:IGC), a medium and smaller companies specialist on the subcontinent, was another “flavour of the year” in 2024 before investors lost their taste for tales of “jam tomorrow”. With no dividend income here and now to help ease the pain, IGC plummeted from £1,000 in January to £852 now.

Size offered no safe haven amid the carnage. Polar Capital Technology Ord (LSE:PCT), a £3.9 billion fund that had been a top 10 holding in my “forever fund” for many years, was my fourth-worst performer in Q1.

Priced for perfection in 2024, like PCT’s top four holdings by value - the artificial intelligence chip-maker NVIDIA Corp (NASDAQ:NVDA); the Facebook owner Meta Platforms Inc Class A (NASDAQ:META); the software giant Microsoft Corp (NASDAQ:MSFT) and the iPhone-maker Apple Inc (NASDAQ:AAPL) - this fund proved ripe for correction in 2025. Never mind the generalities, it turned £1,000 into just £854 in three terrible months.

Those that weathered the storm

Only seven of my 18 investment trusts managed to avoid losing money in Q1. Ecofin Global Utilities & Infrastructure Ord (LSE:EGL) came third, helped by its 4.3% dividend yield, rising by just over 5% over the past five years, to turn £1,000 into £1,112 during the last quarter. Rising infrastructure spending and reluctance to rely on dictators for our energy might mean there is further to go.

Fidelity European Trust Ord (LSE:FEV) benefited as international investors switched away from America, pushing the CAC 40 index in Paris up 6.5% this year, while the DAX benchmark in Frankfurt soared nearly 13% higher. FEV’s top assets - including the world’s largest food company, Nestle SA (SIX:NESN), and the eye-wear group that makes a third of all the optical lenses on this planet, Essilorluxottica (EURONEXT:EL) - helped this £1.9 billion investment trust turn the usual starting sum into £1,121. A modest dividend yield of 2.2%, rising by just over 7% per annum, didn’t hurt.

Most surprisingly, BlackRock Latin American Ord (LSE:BRLA) led the pack in Q1 by finishing the period with a value of £1,125 on the same basis as above. To be fair, this tiny £109 million fund has suffered for so long that it was starting from a very low base and its 6.4% dividend yield does provide one reason to be cheerful.

Gallows humour suited the mood of Q1, as Nick Britton, research director of the Association of Investment Companies (AIC), told me: “The trend of US exceptionalism has continued into the first quarter of 2025 – but only in the sense that the US did exceptionally badly.

“The North America sector was down 5% in total return terms, and the US-heavy tech and biotech sectors fell 14% and 8% respectively. Meanwhile, the Europe sector was up 10%, Japan was up 2% and the UK was broadly flat on the quarter.

“The market’s faith that market jitters would force President Trump to change course on tariffs appears to have been misplaced, but there’s still considerable uncertainty about what he will do next and where the pain will land. One thing’s for sure, his unpredictable style has led to unpredictable consequences for equity markets.”

Here and now, investing internationally with a diversified portfolio to diminish risk seems the best way to cope with Trump’s tariff tantrums. Let’s just hope it doesn’t turn into a global trade war.

Ian Cowie is a freelance contributor and not a direct employee of interactive investor.

Ian Cowie is a shareholder in Apple (AAPL), BlackRock Latin American (BRLA), Ecofin Global Utilities and Infrastructure (EGL), Edinburgh Worldwide (EWI), EssilorLuxottica (EL), Fidelity European (FEV), India Capital Growth (IGC), JPMorgan US Smaller Companies (JUSC), Microsoft (MSFT), Nestlé (NESN) and Polar Capital Technology (PCT) as part of a globally diversified portfolio of investment trusts and other shares.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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