Investment trusts offer a great way to achieve portfolio diversification, making them very popular. In fact, they make up over a third of the entire FTSE 250!
Here are three mid-cap options I think are worth considering today.
Dividends and value
First up is BBGI Global Infrastructure (LSE: BBGI). This Luxembourg-based fund offers an appealing government-backed 7.1% dividend yield, based on 2025 forecasts. That’s more than double the FTSE 250 average.
The high yield’s due to two factors. First, the company has an excellent track record of dividend increases (13 years), driven by the stable nature of the underlying assets. These 56 social infrastructure projects across G7 countries include schools, hospitals, roads, and toll bridges. They earn BBGI inflation-linked revenue.
Second, the share price has dropped 32% in two and a half years, pushing the yield skywards. This is due to higher interest rates that have made cash and bonds look like a safer bet than infrastructure shares. Therefore, a higher-for-longer rate environment or a sudden spike in inflation are risks here.
However, I think the shares look very attractive at 121p.This leaves them 18.4% below the portfolio’s net asset value (NAV) of 148p, as at 30 June.
If and when interest rates move lower, I think the share price could recover strongly as investors reassess the high-quality income on offer.
More dividends
The second option to consider is BlackRock World Mining Trust (LSE: BRWM). This trust invests in mining stocks from around the globe. Top holdings include Glencore, BHP Group, and Rio Tinto.
These mega-miners provide indirect exposure to the green revolution through their production of key materials needed for clean energy technologies. That includes copper, essential for electric grids, wind turbines, and solar panels, as well as nickel, lithium, and cobalt, which are needed in many electric vehicle (EV) batteries.
Now, the risk here is that the performance of these stocks is influenced by the price of commodities, many of which are impacted by goings-on in China. And things haven’t been going well in the world’s second largest economy since the pandemic.
This is reflected in the mining trust’s share price, which is down nearly 30% since the start of 2023.
While commodity prices could always take a tumble, threatening mining profits and the trust’s dividend yield, I think the shares are worth considering at 496p. At that price, there’s a respectable 6.7% yield and 8.3% NAV discount.
Going for growth
The final FTSE 250 stock worthy of consideration is Baillie Gifford US Growth Trust (LSE: USA). The focus on US growth shares might be obvious but we’re talking the crème de la crème, including Amazon, Shopify, Netflix, and Instagram owner Meta Platforms.
But what makes this one different from a run-of-the-mill tech fund is its investments in private companies such as rocket pioneer SpaceX and Stripe (internet payments).
One risk here is a sudden slowdown in artificial intelligence (AI) infrastructure spending. That might damage investor sentiment for top holdings like Nvidia, leading to pressure on the trust’s share price.
Longer term though, I see this as a solid option for direct and diversified exposure to the global technological revolution. A 9% discount to NAV adds weight to the investment case, in my opinion.
This post was originally published on Motley Fool
