Investment trusts: 8 of the best

We enlisted the help of three investment professionals who monitor and use investment trusts regularly, for their tips on what is hot and what is not.

To make it easier for you we have categorised them, so there are trusts for a cautious investor, trusts that should make decent core holdings and trusts that are speculative - where gains could be bumper, but so could the losses.

Here are the thoughts of Mick Gilligan of Killik & Co, Charles Cade of Numis Securities and Nick Sketch of Rensburg Sheppards.

Ruffer Investment Company
This is an absolute-return fund and one of the few long-only funds deserving of the label. Jonathan Ruffer and Steve Russell have done a brilliant job of preserving capital in bad markets and making money in good markets. They still have only 50pc in equities, and should materially outperform cash on deposit over the next five years, whether markets are "good" or "bad". What more does a cautious investor want?

BlackRock Hedge Selector

The fund has an absolute-return mandate and seeks to produce consistent returns with no formal risk or volatility target, although these have historically been low – since inception in April 2004 it produced an annualised return in excess of 17pc.

Perpetual Income & Growth
A mainstream UK equity fund with a cautious stance. Its attractions are based on excellent management, a decent dividend, lower charges than similar unit trusts and the ability to take "income" in a form that will be taxed as capital distributions.

Utilico Emerging Markets

This AIM-listed fund aims to provide long-term capital growth by investing predominantly in infrastructure, utilities and related sectors, mainly in the emerging markets. We like the resilient characteristics of the underlying portfolio earnings and the growth potential associated with emerging markets. We see this as an attractive entry point.

SVM Global

Invests in all the areas that make up small slices of most portfolios, or are ignored altogether – such as property, private equity, emerging markets, commodities and hedge funds. The management team is strong and highly incentivised by owning the stock themselves.

Aberforth Smaller Companies

The managers were positive at the start of 2009, introducing gearing of 10pc. Even so the fund has underperformed in the rally over the past 12 months as it avoided financially stressed companies with weak balance sheets. However, we believe it remains well placed to benefit from a pick up in merger and acquisition activity among smaller companies over the next year. The fund is currently trading on a discount of 14pc and pays an attractive yield of 3.7pc.

Eurovestech

For investors who fancy a punt this AIM-listed fund invests in a diverse range of internet and technology-related business across Europe. The holdings in the portfolio are relatively mature assets, having been held and developed by Eurovestech for almost 10 years. This raises the possibility of significant sales of assets and subsequent return of shareholder capital.

VinaCapital Vietnam Opportunity

Vietnam has been growing strongly ever since the government adopted a policy of increased economic liberalisation in 1986. GDP growth has averaged 7.2pc per year over the past decade, driven by foreign investment and a low-cost entrepreneurial workforce.

Vietnam was one of the best performing global markets in 2006-07, but collapsed in 2008 and remains 55pc below its peak. As a result, there has been little interest from foreign investors who have focused instead on China. However, we believe that valuations in Vietnam now look attractive.