Fantasy fund manager: James Baxter-Derrington
The investment editor of the Daily Telegraph reveals his investment trust picks.
In the AIC’s first fantasy fund manager competition, we’ve asked six journalists to select four investment trusts that they expect to perform particularly well in 2025, but would be happy to hold for the long term. Below, the Daily Telegraph’s investment editor James Baxter-Derrington reveals which four trusts he’s selected and why he thinks they’re likely to do well this year.
JP Morgan American Investment Trust
The story of American exceptionalism in markets is a pervasive one and difficult to ignore, but the further we move through the cycle, the more dangerous the narrative becomes. It’s tough to know how close we are to bust yet it’s painful to continue missing out on the rise.
That’s where this standout vehicle comes in, with its split portfolio curated by two growth managers and two value managers. Not only does it offer style diversification, it has achieved that rarest of active goals – outperforming the S&P 500. Regardless of what happens, this feels like a smart way to access the US market.
JPMorgan American profile page
Chrysalis Investments
Taking full advantage of those features unique to investment trusts, Chrysalis makes an interesting satellite holding. After a tough couple of years, the former Jupiter trust and Starling Bank investor sits on a hefty discount.
But rising stock markets, backing from an activist shareholder and a promise to return a not insignificant amount of capital to shareholders could combine to make 2025 a transformational year for this trust.
Chrysalis Investments profile page
Fidelity China Special Situations
Once a cornerstone investment for near enough anybody, China’s equity markets have been shaken of late, particularly due to the property crash and a very long Covid tail. However, to paraphrase Warren Buffet, “be greedy when others are fearful”.
A standout performer in its AIC sector over five and ten years, Dale Nicholls’ investment trust is the first that comes to mind to make a play on a potential recovery in the world’s second largest economy. Also trading on a hefty discount, it will benefit from a revival of sentiment as well as markets.
Fidelity China Special Situations profile page
Mercantile Investment Trust
Six decades ago, Questor, the Telegraph’s stock-picking column, backed Mercantile Investment Trust in an economic situation eerily similar to today’s. By that point the trust was 80 years old. It has now turned 140 and there is clearly life in the old dog yet.
Discount? Check. Investing in an unloved market? Check. Could the UK markets remain in the doldrums over the next 12 months? Of course, but one needs to invest according to a thesis, and I refuse to believe this country is economically dead forever more.
As such, deeply depressed markets, a very experienced vehicle trading at a discount and full utilisation of the investment trust structure offers a perfect proposition. Plus, any manager who buys Games Workshop clearly knows what they’re doing!
Mercantile Investment Trust profile page
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