Why size isn't everything as number of FTSE 100 investment trusts hits record high

The FTSE 100 welcomed another investment trust to its ranks this month, with a record seven now members of the UK’s blue-chip index.

Tritax Big Box REIT was promoted from the FTSE 250 after a rally in its share price and M&A activity saw it become a £4 billion plus trust.

It joins 3i Group, Scottish Mortgage, Pershing Square Holdings, F&C, Alliance Witan and Polar Capital Technology in the FTSE 100. While this is no small feat, a place among the UK’s biggest companies does not necessarily mean that you are one of the best performers in your sector.

The largest of the lot is 3i. An outlier in the trust space which has benefited in recent years from its investment in Netherlands value retail chain Action Group, which now represents more than 70% of its investment portfolio.

Scottish Mortgage, F&C and Alliance Witan

The FTSE 100’s trust contingent is dominated by the Association of Investment Companies’ (AIC) Global sector which encompasses Scottish Mortgage, Alliance Witan and F&C.

The biggest of this bunch is Scottish Mortgage, with a £13 billion market value. It first joined the FTSE 100 back in 2017, the sixth investment trust ever to do so.

F&C comes in second on a size basis at £6 billion with Alliance Witan at £4.8 billion. The latter is the result of one of the biggest investment trust mergers of recent decades. Back in 2024, Alliance Trust absorbed Witan, immediately catapulting it into the FTSE 100.

Over five years Alliance Witan ranks middle of the Global pack with 63.7% total returns. Scottish Mortgage has made just 11.5% over that time frame, the second worst performance of the Global sector as a whole. Though Scottish Mortgage comes out top over 10 and three years (420% and 76.1%, respectively).

This five-year dip coincides with the pandemic related sell-off and the subsequent period of sticky inflation and higher-for-longer interest rates period which hit many of the growth companies Scottish Mortgage invested in particularly hard.

Alliance Witan and F&C have a more balanced investment approach in terms of style bias, with both attempting to offer something of a one-stop-shop fund option to investors. F&C’s total returns ranked second in the sector over five years at 84%.  

However, despite being the giants of the Global sector, all three were pipped by £650 million Brunner’s five-year performance (94.7%). Brunner aims to be an ‘all-weather’ trust, outperforming regardless of the market backdrop by investing in what it perceives to be resilient businesses.

How does Polar Capital Technology compare?

Moving onto Polar Capital and at £5.7 billion its market valuation is more than double that of its main rival in the AIC’s Technology & Technology Innovation sector, Allianz Technology (£1.9 billion). 

Over five years, Polar has made the best total returns (134.9%) among the technology names, but with just three trusts of any meaningful scale in this sector it’s a harder pool to compare.

For some added context it’s worth stacking Polar’s returns up against the Global names, since these three have a significant exposure to tech and share similar names in their top ten holdings with Polar, such as Nvidia. But even on that basis, Polar still comes out on top.

Like most tech portfolios, the trust has invested in the AI trend, but alongside the usual suspects it has focused on lesser-known companies expected to benefit from growth in artificial intelligence.

What about Pershing Square Holdings?  

Pershing Square is the flagship product of billionaire hedge fund manager Bill Ackman’s US firm, Pershing originally debuted as a vehicle which took long and short positions in 2014 but pivoted to no longer shorting stocks (or in other words betting they would fall) four years later after a tough performance with the management saying they were “going back to their roots”.

Pershing’s five-year performance ranked middle of the North American sector, coming in third out of six names at 86.5%.

And the FTSE 100’s newest trust entrant?  

Finally, to the FTSE 100’s newest addition Tritax Big Box. Real estate trust Tritax invests in ‘big boxes’, as its name suggests, specifically, large-scale, prime UK logistics warehouses and distribution centers. The company is positioning itself to invest in data centers which are being rolled out at pace to help service the expansion of AI.

It is the only member of its sector - IT Property - UK Logistics – and has no set benchmark for comparison so as a proxy, it can be compared to the FTSE EPRA Nareit UK which is designed to track the performance of real estate companies and REITS listed on the UK stock market. Over five years, the index has lost 18% during a difficult period for property investments as a whole, meanwhile Tritax has advanced almost 15%.