One popular way of building a portfolio of funds is the so-called ‘core and satellite’ approach. You start by picking a handful of funds as basic building blocks – usually to achieve broad exposure to global stocks, plus some fixed income depending on your risk appetite. You can then add some smaller ‘satellite’ positions, ie funds that cover specific areas you want to invest in, such as smaller companies or emerging markets.
For the core part of the portfolio, some investors simply opt for a global tracker – such as the UBS Core MSCI World ETF (WRDA), which sits in our Top 50 ETFs list. This will give you cheap and diversified exposure to the entire stock market, but comes with a significant exposure to the US and its technology sector, and of course makes no independent decisions about which stocks to hold.
Investment trusts are a good alternative. You can use them to invest in global markets in a more balanced and active way, while still getting a lot of diversification in one go. It can be a good idea to pair two with complementary features. That way, if one underperforms, the other can hopefully pick up the slack.
There are seven investment trusts with more than £300mn in assets in the Association of Investment Companies’ global sector, but two of them, Scottish Mortgage (SMT) and AVI Global (AGT), are arguably unsuitable as ‘core’ funds.
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Scottish Mortgage’s high-growth strategy can be very volatile, which for many will make it too racy to be used as a basic portfolio block. AVI Global, meanwhile, really homes in on unloved areas of the market; at the moment it has 27 per cent of its portfolio in other investment trusts, a quarter in Japan and 16 per cent in Korea. It’s also pretty concentrated. An interesting proposition in many ways, but perhaps too idiosyncratic to be used for the bulk of your portfolio.
The table below showcases the five remaining trusts, plus JPMorgan Growth and Income (JGGI), which sits in the global income sector but is in effect just a global trust that pays out part of its capital gains as dividends. They are listed in order of five-year performance.
Brunner, for all conditions
Brunner (BUT) calls itself an ‘all-weather’ trust because the managers have freedom to adapt the portfolio to different market conditions and aim to perform well in different circumstances.
Many investment teams have a specific investment philosophy or style to which they aim to stay consistent, which typically results in alternating periods of outperformance and underperformance. Sometimes these market cycles can be very long; value investing underperformed growth for many years before its recent rebound. By trying to balance the two, Brunner aims to achieve more consistent returns.
Another defining feature is the trust’s significant UK exposure. In fact, Brunner uses an unusual benchmark for a global trust, comprised of 70 per cent of the FTSE World ex-UK index and for 30 per cent of the FTSE All-Share; its domestic exposure is currently about a quarter of the portfolio.
Some home bias is not necessarily a bad thing, but investors sometimes prefer buying a dedicated UK fund, or picking specific stocks themselves. If that’s the case for you, it might be better to opt for a trust with less of an overweight to the UK market for your global allocation. As the chart below shows, Brunner is also the trust with the lowest exposure to the US of the group.
F&C, for diversification
In contrast to Brunner, F&C (FCIT) only has levels of UK exposure in line with global benchmarks, which means around 3 per cent of its portfolio. The trust aims to work as a one-stop shop for global investors and many of its top names are the same as the FTSE All-World index’s.
However, the portfolio is incredibly diversified, with hundreds of holdings, and really doesn’t take punchy bets on individual stocks. Its biggest holding, Nvidia (US:NVDA), only accounts for about 4 per cent of the total, which is actually a slight underweight position compared with the FTSE All-World. Nvidia, Apple (US:AAPL) and Alphabet (US:GOOGL) are the only three companies that make up more than 2 per cent of the portfolio each.
F&C does add some excitement by investing about a tenth of its assets in private equity. This should be too small to ever cause liquidity issues – and when things go well, private equity can be a source of outperformance.
Choosing F&C as a core holding is less about doing better than the market and more about wanting something reliable, diversified and with a long track record. And, you do have to keep in mind that in the past few years outperformance has been very difficult for all these trusts because of how concentrated the global stock market has been. With that in mind, F&C’s performance looks very decent over multiple time periods.
JGGI, for regular payouts
JPMorgan Growth & Income’s portfolio does not tilt towards companies that generate income, but the trust itself pays out 4 per cent of its net asset value (NAV) every year through dividends.
This is a precious feature for some income investors – they don’t have to compromise on total returns by focusing on high-yielding companies, but equally someone else takes on the difficult job of regularly liquidating investments to turn growth into cash. However, note that the level of income paid every year will depend on performance, and can go down as well as up.
The portfolio is very US-heavy, with all the ‘Magnificent Seven’ tech stocks apart from Tesla (US:TSLA) among the top 10 holdings. We recently published a Deep Dive into this trust (‘This popular trust struggled in 2025 – what happens now?’, IC, 9 January), which explains how the managers have started focusing more on momentum stocks and less on quality companies, in the hope of reversing the underperformance of the past year.
Alliance Witan, a portfolio of best ideas
Alliance Witan’s (ALW) managers pick stockpickers, rather than stocks. The trust employs different fund houses, asking them to select no more than 20 of their best global ideas. The trust’s in-house team then decides how much capital to allocate to each manager and when one needs replacing. This approach is intended to combine high conviction and diversification.
Alliance Witan is another ‘all-weather’ portfolio that can act as a good one-stop shop but isn’t shooting for the stars. The idea is that its various stockpickers (11, at the moment) will have different styles and approaches, and so will outperform and underperform at different times, creating a steady overall return.
Concentration is lower than in the index, with the 10 biggest holdings accounting for less than a fifth of the portfolio. Only four of the big US tech stocks sit in the trust’s top 20: Microsoft (US:MSFT), Alphabet, Amazon (US:AMZN) and Nvidia, for a combined exposure of less than 10 per cent, which is a lot lower than many peers. The portfolio generally looks quite different from the index, and features some UK companies in its top 20, including Unilever (ULVR) and Diageo (DGE); the UK makes up about 8 per cent of total assets.
Bankers, for US tech
Bankers (BNKR) says its stocks are chosen by “four regional experts who each focus on a specific part of the global market”, and that their local expertise sets the trust apart from competitors.
Bankers’ portfolio underwent a revamp towards the end of 2024, with the managers reducing the number of holdings (around 100 now, from almost twice as many previously) and allocating more to technology and to the US, which now account for 35 per cent and 60 per cent of the total, respectively.
As a result of this shift, the trust’s portfolio has become more aggressive and the top 10 holdings look quite similar to the benchmark. But it is also true that the changes appear to have paid off, with the trust performing better than most peers in the past year. This trust will work well for you if you don’t mind the concentration of the global stock market and think that US stocks will remain at the forefront of investors’ minds for a long time to come.
Monks, for unrestrained growth
The Baillie Gifford-managed Monks (MNKS) would perhaps be considered by some to be too aggressive for the role of a core holding.
Still, following a period of underperformance after the war in Ukraine began in 2022, the managers repositioned the trust to reduce risk. Its portfolio is split into three groups of stocks: ‘growth stalwarts’, or big companies that can deliver profits in a range of environments; ‘rapid growth’, or younger businesses with vast growth opportunities; and ‘cyclical growth’, or cyclical stocks that can still deliver long-term growth. Exposure to the second group was cut in 2022 in favour of the other two.
The trust remains very growth-focused, with about a third of the portfolio in the technology sector and a fifth in emerging markets. It also has some exposure to early-stage private companies, both directly and via Baillie Gifford’s separate Schiehallion Fund (MNTN). The latter currently accounts for about 5 per cent of the Monks portfolio, while the direct unquoted holdings were around 3 per cent as at last October. Only use this trust as a core holding if you can stomach the potential volatility, and perhaps consider pairing it with a more conservative peer.
