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Split-cap trusts bounce back to trounce markets

Split-capital investment trusts enjoyed a strong recovery last year, with returns far outstripping those of the FTSE All Share index, according to stockbroker Caze-nove&#39s annual review.

Total returns on ordinary income shares rocketed to an average 47.1 per cent while zeros shot up to 37.3 per cent, significantly above the 21 per cent rise recorded by the All Share index. Investment trusts as a whole also performed well, with prices rising by an average 24 per cent, outperforming the index by 3 per cent.

The best-performing broadly based sector was global emerging markets, which had a net asset value return of 43.2 per cent.

Other strong performers included the European and UK smaller companies sectors, with NAV total returns of 44 per cent and 42.4 per cent respectively.

Total inflows to the investment trust sector reached £2.13bn, nearly double the 2002 total of £1.21bn. Caledonia Investments&#39 conversion to investment trust status last April, boosted the 2003 inflow by £656m.

Total inflows in 2003 were still well down on the £5.94bn total in 2001. These inflow fluctuations are reflected in the net figures, with a £321m total net inflow to the sector in 2003 against a net outflow of £3.74bn in 2002 and a net inflow of £2.8bn in 2001.

Cazenove is recommen-ding investment trusts this year such as 3i Bioscience, Aberdeen Asian smaller, Fidelity European values and Invesco Perpetual UK smaller fund.

Analyst Christopher Brown says: “Our recommendations reflect our continued belief that 2004 will be a year for stockpickers and eclectic funds.”

AITC spokeswoman Jemma Jackson says: “2003 saw a number of mergers and restructurings, which the AITC has long advocated if it means the prospect of a bigger, more popular and more liquid company.”

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