Scottish Mortgage is one of my top 3 investment trusts for 2023

Trust trading investments like any other stock. I like them because it’s a relatively simple way to get exposure to a large number of stocks. At Scottish Mortgage Investment Trust (LSE: SMT) is one of my beliefs about tech stocks.

I’m considering adding it Blackrock Throgmorton Trust (LSE: THRG) into my portfolio to gain significant exposure to smaller UK companies. But it’s not just a portfolio of stocks that I can say by buying a trust. By owning At Renewable Energy Infrastructure Group (LSE: TRIG), I have access to income and electricity generating assets in the renewable energy space.

UK small stocks

Manager of Blackrock Throgmorton looking for the highest growth stocks in the UK small space for your portfolio. The trust also takes short positions against underperforming companies, which differentiates this trust from its competitors.

Performance has improved over the long term. Over the past 10 years, the trust has returned 252% versus 130% for the benchmark. In the last month, the share price of BlackRock Throgmorton changed to -38%. This is due to underperforming growth at a time of rising interest rates and inflation. A modest amount of gearing also magnifies losses.

Using data from Morningstar, I can see that the net asset value (NAV) per share is believed to be 631p. The lowest value of Black Throgmorton Trust in 2019 is 612. That means Throgmorton’s BlackRock portfolio is selling for about 3% less than what it is believed to be worth. And with that track record and some signs that inflation is easing, I think we’re doing pretty well. I plan to start building my position this year.

Investment in renewable energy

At Renewables Infrastructure Group invests mainly in wind farms, but also solar and battery storage assets in the UK and Europe. It generates income from the sale of electricity from these assets. Inflation should slowly push profits from existing operations higher over time. In addition, the company continues to seek to increase its income-generating assets.

The UK government’s fortunes tax on electricity generators will drag on earnings in 2023 and 2024, possibly dampening dividend growth and putting pressure on share prices. But beyond 2024 I think dividend growth will return. And because the renewable energy industry shows no signs of slowing down, it will continue to grow. Its share price has risen 113% since 2013, and hopefully it can repeat that performance.

Scottish Mortgage Investment Trust

Scottish Mortgage invests in companies that bring transformational technologies, products and processes to market. It chases high growth but continues for a long time to realize it. Some of these investments are in unlisted companies, and the overall portfolio is rated as a six on a seven-point risk scale according to the company’s literature.

That risk was highlighted last year when the company’s share price fell 45.7% as the market turned away from growth stocks. But the rewards can be great. Over the past 10 years, Scottish Mortgage’s share price has changed by +421%. Like BlackRock Throgmorton, if inflation eases and rates stop rising, growth should return, making Scottish Mortgage a solid choice in 2023 and beyond in my portfolio.