Investment trust best buys: What Investment asks three investment trust specialists to recommend their favourite investment trust shares, for a cautious, a balanced and an aggressive investment

What Investment, June, 2007

CAUTIOUS OPTION

John Moore, head of the collective investments service at Brewin Dolphin, is focusing on property-based funds for investors that want to manage risk over the medium to long term. The shares of Standard Life Investments Property Income Trust are ranked fifth out of five trusts in the Property sector over three years to 30 April 2007. They have returned 30.28 per cent over that period, compared to a sector average of 71.19 per cent.

He says, 'Standard Life Property Income is currently on a 16 per cent discount, and yields 5.5 per cent. You have to accept that it has a bit of gearing and the property market may well be going the wrong way in the short term, but it is looking attractively valued on a medium- to long-term view.

'You have to remember that not so long ago the trust was standing at quite a high premium, and if you compare its 16 per cent discount and 5.5 per cent yield with some of the European property trusts that are on 20 per cent premia and yielding five per cent, it is clear which is the more attractive medium-term option.'

He adds, 'Retail investors will also be reassured by the yield. Income is an important part of total return and a starting yield of five to six per cent is a pretty solid basis, giving you a total return to start with of over seven per cent. I wouldn't necessarily buy it tomorrow, but you should at least start looking at it now.'

Contact: Standard Life Investments

Tel: 0131 245 0055

or visit

www.standardlife investments.com

BALANCED OPTION

Tim Cockerill, head of research at Rowan & Co, returns to a tried and trusted favourite as a suggestion for a balanced investment. The shares of Bankers Investment Trust are ranked 20th out of 30 trusts in the Global Growth sector over three years to 30 April 2007. They have returned 74.91 per cent over that period, compared to a sector average of 83.14 per cent.

He says, 'I would suggest that investors seeking a balanced approach consider Bankers Investment Trust. The shares are currently sitting on a 12 per cent discount and that has to be an attractive proposition. The discount has been widening because the NAV has been performing better than the share price. Bankers has a broadly based portfolio, with 53 per cent currently in the UK, 17 per cent in Europe, 12 per cent in North America, eight per cent in Japan and six per cent in the Far East.'

He adds, 'This means that you have a nicely geographically diversified large-cap portfolio, and I like the way the fund is run. Alex Crooke has been in charge of the portfolio since 2003 and he runs the UK part, bat he can call on the skills of the rest of the Henderson Global Investors team for other areas. This means that you get a mix of investment styles.

'The portfolio is extremely well diversified with over 250 holdings, but turnover is low. This tells you that you are getting good, old-fashioned long-term investing, rather than somebody thinking they can play the market.'

Contact: Henderson Global Investors

Tel: 020 7818 1818

or visit

www.itshenderson. com

AGGRESSIVE OPTION

Charles Cade, head of investment trust research at WINS Research, points more aggressive investors in the direction of the Far East. The shares of Edinburgh Dragon are ranked eighth out of 11 trusts in the Asia Pacific (excluding Japan) sector over three years to 30 April 2007. They have returned 81.76 per cent over that period, compared to a sector average of 87.57 per cent.

He says, 'We have been looking at Edinburgh Dragon recently. It is managed by Jeremy Whitley, who is part of Hugh Young's Asia Pacific team based in Singapore. The trust provides exposure to the Asia Pacific markets, excluding Japan, and Hugh Young has built up a very impressive track record over the years for investing in the region.

'It is based on a value-driven portfolio of quality companies. Currently, the trust's shares are on an 11 per cent discount to NAV, which has widened recently, and it is ten per cent geared, so there is some element of risk, but it is also exposed to some key growth markets.

'Performance has been a bit dull recently, but the Aberdeen approach in a momentum-driven market will tend to lag behind at times. For example, the portfolio is heavily exposed to China, and the Chinese market has come off a bit recently with fears of overheating. But you want to have some exposure there over the longer term, and we feel that this is a great opportunity to buy a solid fired when it is a little bit out of favour.'

Contact: Aberdeen Asset Managers

Tel: 0500 00 00 40

or visit

www.aberdeen-asset.com