I’ve been looking at some of my best investment trusts to buy. They can be a great way to diversify my portfolio in addition to the stocks I own. After all, investment trusts are simply a type of fund that trades on an exchange, with various different strategies that I can choose from.
Let’s take a look at two that I’d buy today.
Digital infrastructure
I view Big Data as one of the next big mega-trends. Oracle say this is “data that contains greater variety, arriving in increasing volumes and with more velocity”.
This brings me to the first investment trust, Digital 9 Infrastructure (LSE: DGI9). It invests in a range of digital infrastructure assets, such as subsea fibre, data centres, and also wireless tower networks. According to Digital 9 Infrastructure, internet traffic was predicted to increase by an average of 30% every year, even before the pandemic. Therefore, I view the trust as an excellent way of gaining exposure to the growth in Big Data in the years ahead.
Digital 9 Infrastructure targets both income and capital returns for its investors. However, it’s a fairly new trust, having only listed through an initial public offering (IPO) back in March 2021. As such, there’s limited track record on dividend payments. Also, the trust has been highly acquisitive since the IPO. It raised an additional £275m by way of a share placing, and has acquired numerous other digital assets in a short space of time. This is in line with its strategy, of course, but the limited track record does heighten the risk slightly.
The trust also incorporates the UN’s Sustainable Development Goal 9 into its investment process, which is to build resilient and sustainable infrastructure. This is represented by the ‘9’ in the trust’s name. It’s a forward-thinking approach to digital infrastructure investments, in my view, given the concerted efforts towards sustainability today.
So, on balance, I think this is one of my best investment trusts to buy.
A diversified mining trust
I’d also add the BlackRock World Mining Trust (LSE: BRWM) to my portfolio. It invests in a diversified mix of metals and mining assets across the world.
The trust aims to maximise total shareholder returns. It certainly achieved this last year as the dividend yield was 4%, and the trust’s net asset value increased by over 13%. It’s important to note that commodity prices can be highly volatile, so these returns are certainly not guaranteed. The strategy can also use leverage, which can amplify both gains and losses. This does increase the risk of the investment.
There’s also a sustainability benefit to investing in the trust. This is because certain metals are crucial components in things like electric vehicles (EVs), batteries, and wind turbines. For example, EVs require three- to-four times as much copper as standard vehicles. The BlackRock World Mining Trust currently has 21% of its assets exposed to copper, according to its factsheet.
I do like the diversification that this trust can bring to my portfolio. I would gain exposure to an experienced team that invests in critical resources for decarbonisation and renewable energy sources. So, taking everything into account, I’d buy this trust in my portfolio today.
Dan Appleby has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
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