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Julian Gibbs

Over the longer term, well-managed smaller companies investment trusts and

unit trusts usually outperform their bigger company equivalents.

Over the past five years, UK smaller companies unit trusts have gone up on

average by 142 per cent against a rise of 103 per cent for the UK all

companies sector and 79 per cent for the UK equity income sector.

Friends Ivory & Sime has produced a 20-20 portfolio which comprises its

three smaller company investment trusts, all of which have outperformed

their relevant indices.

Each of the trusts invests in a different part of the smaller companies

market. The Aim trust, up by nearly 300 per cent in three years, is managed

by Bill Brown and is the top performer in its sector by a long way. The

Discovery trust invests in fledgling companies with a market capitalisation

of below £50m, while the UK smaller companies trust invests in a wide

range of companies with market capitalisations of up to £500m.

The 20-20 portfolio has a worthwhile advantage over nearly all other

investment trust and unit trust portfolios in that there is a lifetime

guarantee. Should the investor die, it pays out at least the value of the

original investment to the heirs even if the stockmarket has fallen


Furthermore, the minimum guarantee is reviewed each year on April 5 each

year and, if the portfolio has risen, the new price becomes the guarantee.

Another advantage is that the investor can choose to take an income of up

to 10 per cent a year of his or her original investment, paid quarterly,

which will comprise part income and part capital gains.

This seems to be an ideal Isa investment for the long-term investor.


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