Investment trusts ended 2020 in good shape, despite the global pandemic and political turmoil that created uncertainty in markets. Around 70 trusts delivered strong share price growth, ending the year more than 20% higher than their starting point, but can the upward trajectory continue?
Investment trusts typically experience more volatility than stock markets generally, and the nature of these top performers offers an insight into why this is. A large number have significant exposure to Asia – particularly China – and many have a large amount of investment in technology companies that have been some of the biggest beneficiaries of the global pandemic.
That raises the question of whether Amazon, Zoom and Netflix, which were among the biggest winners in 2020, can continue to perform well as a semblance of normality returns to our lives now that a vaccine has been discovered and gradually rolled out.
In that situation, there might be a temptation to sell and lock in profits, which is understandable. However, many investors who have been left kicking themselves for selling out in the past when shares had risen sharply. A good example is Amazon, which had a share price around $600 five years ago and topped $3,000 last summer. Selling too soon was a painful lesson for those who didn’t see the growth continuing.
It’s important not to act too hastily, and it’s worth seeking financial advice before buying or selling any investment. When it comes to wealth management in Chester, our specialists will be happy to discuss this with you here at Hartey Wealth Management.