The 2 investment trusts I own as we start 2023


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Mutual funds are a great way to gain exposure to the stock market. Not only do these products provide quick versatility, they are generally very cost effective.

Coming into 2023, I have money in two different mutual funds. This is an introduction to the products that I own.

disruptive growth stock

let’s start with Scottish Mortgage Investment Trust (LSE:SMT). This is a growth-focused trust that invests in disruptive technology companies and provides exposure to themes such as decarbonisation, fintech and healthtech. It has nothing to do with Scottish mortgages.

I use this trust to gain exposure to risky and disruptive growth stocks that I wouldn’t buy individually.biotechnology companies modern (Trust Top Holding) is a good example here. This is a little too speculative for me and not a stock I would buy myself. But I am happy to own it as part of a diverse trust.

It also uses SMT to access private and growing companies such as ByteDance (owner of TikTok) and Epic Games (creator of Fortnite). Private companies are typically only accessible to sophisticated investors with millions of pounds.

Currently, Scottish mortgages are very risky mutual funds. So I don’t have a big position here. By keeping our positions small, we can take advantage of the potential upside if the trust goes down significantly (like in 2022) without being overly concerned about the impact on our portfolio.

SMEs with sound financial standing

Other mutual funds I currently own are: Smithson (LSE: SSON). The trust, managed by the Fundsmith team, is also focused on growth. However, we target quality small and mid-cap stocks in good financial standing.like his brother Fundsmith Equityfocuses on companies with high profitability and strong balance sheets.

I use this trust to reach out to top internationally listed small businesses.cyber security company FortinetMedical Technology Specialist fieldsand an Australian software company technology one Here are some good examples. All of these stocks are included in the Trust’s top 10 stocks. Exposure to these types of companies helps diversify my investment portfolio.

Well, the performance of this trust in 2022 was very disappointing. Despite its focus on companies in good financial standing, the stock price fell significantly. If rates continue to rise and growth stocks remain unsupported, the outlook could be even weaker.

But I’m not too upset by this short-term underperformance. Over the long term, we expect the trust to deliver solid returns as we focus on high quality businesses that have the potential to double our earnings.

The two mutual fund posts I own in 2023 were first published on The Motley Fool UK.

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Edward Sheldon has held positions with Scottish Mortgage Investment Trust Plc, Smithson Investment Trust Plc and Fundsmith Equity. The Motley Fool has no positions in any of the shares mentioned. The views expressed about the companies mentioned in this article are my own and may differ from the official recommendations I make on subscription services such as Share Advisor, Hidden Winners and Pro. At The Motley Fool, we believe that considering diverse insights makes us better investors.

Motley Fool UK 2023



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