3 of the best investment trusts to buy now

If I were starting over as an investor today, I would definitely put my money into investment trusts. These are similar to investment funds, but with some structural differences. Trusts also tend to have lower fees, which is always a good thing.

55 years of dividend growth

The first trust I want to write about today has increased dividends for 55 consecutive years. City of London Investment Trust (LSE: CTY) was formed in 1860 and has been investing in the stock market in its current form since 1932.

As you may have guessed, the main objective of this investment trust is to provide reliable income, supported by long-term capital growth. Majority of the shares in which the trust invests are FTSE 100 companies with strong dividend records.

For example, the top 10 stocks are currently included British American Tobacco, shellgiant drink Diageoand pharmaceutical groups AstraZeneca.

City of London currently offers a dividend yield of 4.7%, compared to around 3.7% for the FTSE 100. Generally speaking, the value of the trust has followed the FTSE 100 in recent years.

There can be no assurance that future performance will reflect past performance results. But with such a long track record, I believe this strategy will continue to do well.

Global growth stocks

My next choice was completely different. Scottish Mortgage Investment Trust (LSE: SMT) is known for its long-term focus on disruptive growth businesses. Top holdings include vaccine companies Modern, Amazon, Tesla, and the luxury group dry.

The trust’s share price rose during the pandemic but has now returned to more reasonable levels. I’m starting to think this might be a good time to buy.

Scottish Mortgage is unusual in that the trust’s management really takes a different approach to picking growth stocks. Although the top holdings are now household names, in many cases the trust has invested long ago, when the business was smaller.

Despite selling last year, Scottish Mortgage shares have risen 360% over the past 10 years. This is the kind of horizon that should be here, in my view.

The trust’s long-term approach means it could be years before we know whether Scottish Mortgage has successfully identified the next big growth opportunity.

Despite this risk, I will allocate some of my portfolio to Scottish Mortgage. It’s really different and has a very strong track record.

A yields 6% of renewables

JLEN Environmental Assets (LSE: JLEN) invests in various renewable projects. Wind and solar account for about 40%, but the trust also invests in waste and bioenergy, anaerobic digestion, and several other growing areas.

In total, the trust has £12bn of assets under management, with 3.1GW of electricity generating capacity. Most of the annual income is supported by fixed price agreements and subsidies, so there is good visibility for the next year.

Of course, subsidies also highlight risks. Government policies are subject to change. These projects may be less profitable in the future.

However, JLEN Environmental Assets is managed by experienced managers and has been operating in this sector for almost 10 years. That is quite long in renewables.

Management has increased the dividend every year since the 2014 IPO. The stock currently yields 6%. I’m thinking of buying it.