Who’s your favourite superhero? Superman, Batman, Spider-Man, Wonder Woman? Whoever it is, we can all agree that superheroes with their phenomenal superpowers have an enduring appeal. So, turning to investing – I think the secret superheroes of the investment world are investment trusts. Yes, I know that might sound strange, but investment trusts have superpowers which can help them deliver strong long-term performance. Let’s delve into these and find out how they help your investment trust generate returns. 

The first superpower is their special structure. Investment trusts are companies listed on the stock market whose sole purpose is to invest in other companies to generate a profit for shareholders. This structure allows trust managers to take a long-term view of their portfolio, because they don’t have to sell assets when investors sell their shares. This makes investment trusts particularly suitable for assets like smaller companies or private companies which can otherwise be harder to sell readily when a manager needs to fund a payout to investors.

This superpower helps investment trusts deliver strong long-term performance and has contributed to the performance of 68 ISA millionaire investment trusts. Investing the full ISA allowance annually from 1999 to 2025, a total of £346,560, and reinvesting the dividends in these investment trusts would have generated a tax-efficient sum of money, more than a million pounds.  One of the top five best performing ISA millionaire trusts is Aberdeen Asia Focus which would have delivered more than £2 million from that original £346,560 investment by investing in Asia Pacific smaller companies.

Gabriel Sacks, Lead Manager of Aberdeen Asia Focus explains: “Asian smaller companies have delivered strong long-term returns, driven by the region’s structural growth and the breadth of high-quality listed businesses that are often overlooked by mainstream investors. Because returns across Asian markets are highly dispersed, we are also able to build a portfolio that is resilient and almost entirely distinct from typical indices, focused on uncovering the region’s next generation of market leaders.”

Gabriel also thinks there are great opportunities: “Looking ahead, we believe investors remain under-allocated to Asian smaller companies. With thousands of under-researched opportunities across fast growing economies, this continues to be one of the most compelling areas of global equity markets.”

The second superpower is investment trusts’ income advantage, which allows them to smooth their flow of dividends and produce long records of dividend growth. There are 20 dividend hero investment trusts which have raised their dividends consecutively every year for more than 20 years. A trust can do this because it can retain up to 15% of the income it receives, and this reserve of income can be used to boost dividends when markets are tough. Whilst dividends are never guaranteed, investment trusts’ dividend hero track records are highly valued by income investors. 

So why is dividend growth important and why is it relevant in challenging markets? Meet Thomas Moore, manager of dividend hero investment trust Aberdeen Equity Income Trust, which currently has 25 years of consecutive dividend growth and a 5.9% yield. Thomas explains: “We believe our growing income stream should be seen as a bedrock for our shareholders’ returns, reducing reliance on stock markets rising every year. By focusing on reliable sources of income, we drill down into the fundamentals of the stocks we invest in, preferring well-established businesses generating attractive cash flows, rather than concept stocks promising growth in the future.”

And how do managers achieve these long records of dividend growth? Martin Connaghan is manager of another dividend hero trust Murray International Trust, which currently has 21 years of consecutive dividend growth and a 3.6% yield. He explains: “We can smooth dividend payments for investors over time because we set aside excess income generated from our portfolio over many years. This is called the revenue reserve and is used to cover challenging times when there may be a shortfall between the dividend and the income from the portfolio. Our revenue reserves are extremely healthy – over £85m as at the end of 2025 – which is equivalent to more than one year’s worth of total dividend payments for the trust.”

Investment trusts’ superpowers help them perform for their investors over time. Their special structure allows managers to take a long-term view of their portfolio, and their income advantages help trusts deliver long records of dividend growth. Compounding can power your returns over the long term, and this is particularly significant when dividends are reinvested. There are other strengths too, such as gearing – the ability to borrow to buy more assets, which boosts performance in rising markets. Investment trusts also have independent boards of directors to look after shareholders’ interests and investors can have their say on the future of their trust by voting and asking questions at meetings. No wonder I think investment trusts are superheroes. Now which trust is your favourite?

Important Information

Risk factors you should consider prior to investing:    

If you require advice, please speak to a qualified financial adviser.

Murray International Trust dividend per share across 10 years.

Aberdeen Equity Income Trust dividend per share across 10 years.

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