Fantasy fund manager: Moira O’Neill

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, Financial Times columnist Moira O’Neill explains which four trusts she’s selected and why she thinks they’ll do well this year. 
 

City of London Investment Trust

This trust focuses on income and growth, with a bias to large multinational companies listed on the London Stock Exchange. I’ve been holding this as a slow but steady portfolio building block for my retirement. It’s perhaps one of my most ‘boring’ holdings, but could 2025 be the year that it becomes exciting?

There’s been a lot of talk for quite a long time about UK equities being ripe for a recovery. A few investment banks have predicted positive prospects for UK equities in 2025 but many analysts are also wondering what the catalyst for recovery will be.

City of London yields 4.87% and has good revenue reserves. It’s one of the AIC’s longest-standing dividend heroes, with a track record of raising dividends that its board and fund manager are very keen to protect. At the start of 2025 the trust is trading at a very small premium to its underlying assets.

City of London Investment Trust profile page
 

Henderson Smaller Companies Investment Trust

Whilst backing large companies, I’m also very aware that the sweeter spot in UK equities perhaps lies in smaller companies outside the FTSE 100 index, where there are lots of value opportunities.

So I’m choosing Henderson Smaller Companies. I’ve also held this trust for a few years but at time of writing it’s trading at a discount of 13%. This may be an opportunity to buy in at a bargain, though there’s no guarantee the discount will close. Importantly, this trust pays investors an income too – its yield is 3.33% on the current share price. I also like that the trust has increased its dividend every year for the last 20 years.

Henderson Smaller Companies Investment Trust profile page
 

International Biotechnology Trust

Thematic investing is likely to throw up some good performance in the coming years. One theme I like is biotechnology, a high growth market partly driven by the demographic challenge created by an ageing population. Kepler Trust Intelligence points out that major pharma companies face a “patent cliff” that includes some of their best-selling blockbuster drugs. This has prompted a record high in M&A transactions as pharma companies look to outsource their research and development to smaller, nimbler biotech companies.

International Biotechnology Trust mainly invests in listed companies but also has a small exposure to unquoted companies where there may be higher growth opportunities. As an income-seeker, I also like the enhanced dividend policy. As biotech companies do not generally pay dividends, the trust pays a 4% dividend out of capital returns.

International Biotechnology Trust profile page
 

Polar Capital Technology Trust

I need some more exposure to the biggest theme of all – technology. I’m choosing Polar Capital Technology, which has a large exposure to US tech companies. Although it’s just had a good year for performance, it’s still trading on a 10% discount, and the managers say they are increasingly confident that 2025 will see further upside as the productivity benefits of AI adoption become more obvious. 
 

Polar Capital Technology Trust profile page

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