Have you ever sat on the sidelines, watching the stock market climb, and wondered if you’ve missed the boat? I’ve been there, second-guessing the perfect moment to jump in. But here’s the thing: 2025 might just be the year to stop hesitating and start investing in UK equities. The FTSE 100 is on track to hit 10,000 for the first time, driven by steady corporate earnings and a shifting economic landscape. Despite this, many UK investors are still clinging to cash, wary of the risks. But what if the real risk is missing out on a golden opportunity?
Why UK Equities Are Ready to Shine
The UK stock market has been quietly building momentum, and the signs are hard to ignore. Corporate earnings are marching forward, not just in the UK but globally, fueling optimism for investors. Yet, a staggering two-thirds of ISA savings in the UK are parked in cash, earning little to no real return after inflation. With interest rates trending downward and inflation refusing to budge, that cash is losing value every day. It’s a slow bleed, and I can’t help but think it’s time to rethink that strategy.
Investors are starting to sense a change in the air. The possibility of a more business-friendly government in the UK is sparking hope, even if economic challenges like a gloomy fiscal outlook linger. For those ready to take the plunge, investment trusts offer a compelling way to ride this wave. These trusts often outperform in rising markets, especially when their discounts to net asset value (NAV) start to shrink, as they’re doing now at an average of 14%. That’s a signal worth paying attention to.
The Case for Investment Trusts
Investment trusts are like the Swiss Army knives of the investing world—versatile, reliable, and packed with potential. Unlike traditional funds, they can hold a mix of public and private companies, giving you access to opportunities you might not find elsewhere. Plus, they often trade at a discount to their underlying assets, which means you’re essentially buying a dollar’s worth of value for less. When those discounts narrow, as they’re starting to now, the returns can be a pleasant surprise.
Two trusts, in particular, stand out as excellent starting points for anyone looking to dip their toes into UK equities. They’re different in style—one’s a high-flying growth seeker, the other a steady value hunter—but together, they form a balanced approach to capturing market upside. Let’s dive into why these two are worth your attention.
The Growth Powerhouse: A Trust Built for Big Wins
First up is a trust that’s all about chasing exceptional growth. This £13 billion giant focuses on finding the world’s most innovative companies, from tech titans to unquoted startups. Its strategy? Identify businesses with the potential to reshape industries and hold them for the long haul. Over the past decade, it’s had some jaw-dropping wins—think 100-fold returns on certain tech bets—but it’s not without its scars. A rough patch a few years back saw its NAV drop nearly 40%, a reminder that high reward comes with high risk.
Since hitting a low in mid-2023, though, this trust has been on a tear. Its share price has nearly doubled, and its NAV is up 34% in the past year alone, far outpacing the global index’s 13%. What’s driving this? A mix of smart stock picks and a narrowing discount to NAV, now at 8%. The trust’s portfolio is a blend of household names like Amazon and Meta, alongside private ventures like a space exploration company that’s revolutionizing satellite connectivity. With 26% of its assets in private equity, it’s betting on companies that aren’t yet on public radars.
“The best opportunities often lie in companies that haven’t yet hit the public markets. Restricting ourselves to listed stocks would mean missing out on tomorrow’s giants.”
– Portfolio manager
But here’s where it gets interesting. This trust doesn’t just buy and sell—it runs its winners. With a low portfolio turnover of 9%, it’s in it for the long game, even if that means weathering some volatility. Its managers are candid about their misses, admitting to a handful of total losses over the years. But as they put it, you can only lose your money once on a bad bet, but a good one can multiply it many times over. That’s a philosophy I can get behind.
The Value Champion: Steady and Strategic
If the growth trust is a racecar, the second trust—a £1 billion value-focused player—is more like a well-tuned sedan. It’s not flashy, but it gets the job done with remarkable consistency. Over the past five years, it’s delivered a solid 90% return, compared to the global index’s 75%. Even in a tough market earlier this year, its share price took a modest hit of 15-20% before bouncing back. Trading at a 6% discount to NAV, it’s a bargain for those who value stability.
This trust’s approach to value investing isn’t about scooping up cheap stocks and hoping for a rebound. Instead, it targets undervalued assets with hidden growth potential. About 40% of its portfolio is in family-controlled holding companies—think media and entertainment giants—where the market undervalues the sum of their parts. Another 31% goes into closed-end funds trading at steep discounts, like private equity specialists. The rest? A hefty 29% is focused on markets like Japan and Korea, where corporate reforms are unlocking serious value.
- Holding companies: Family-run businesses with undervalued assets.
- Closed-end funds: Discounted investments with growth potential.
- Japan and Korea: Markets ripe for reform-driven gains.
Japan, in particular, has been a standout. A decade ago, this trust spotted opportunity in a market where companies traded at rock-bottom valuations. Thanks to reforms pushing corporate accountability, those bets have paid off handsomely. Now, Korea’s following suit with similar reforms, and the trust is diving in, targeting companies with low price-to-book ratios and heaps of cash. It’s not about short-term wins—it’s about patiently unlocking value.
Why These Two Trusts Work Together
At first glance, these trusts seem like opposites—one chasing high-growth tech unicorns, the other digging for undervalued gems. But that’s exactly why they’re such a powerful combo. The growth trust thrives in bullish markets, riding the wave of momentum, while the value trust keeps things steady when volatility strikes. It’s like having both a sprinter and a marathon runner on your team—each excels in different conditions, but together, they cover all bases.
| Trust Type | Focus | Risk Level | Recent Performance |
| Growth Trust | Innovative companies | High | 34% (1 year) |
| Value Trust | Undervalued assets | Medium | 90% (5 years) |
I’ve always believed that diversification isn’t just about spreading your money around—it’s about balancing different approaches to capture opportunities while managing risk. These two trusts do exactly that. The growth trust’s aggressive bets on tech and private equity can deliver outsized returns, but its volatility can be stomach-churning. The value trust, on the other hand, offers a smoother ride with steady gains, making it a solid anchor for any portfolio.
Overcoming the Fear of Volatility
Let’s be real—investing can feel like a rollercoaster. The fear of short-term dips keeps too many people on the sidelines, clutching their cash ISAs while inflation eats away at their savings. But here’s a question: what’s scarier, a temporary market dip or watching your money lose value year after year? The data is clear—over the long term, equities outperform cash by a wide margin. The key is to focus on the big picture and not get spooked by daily fluctuations.
“Volatility is the price you pay for the superior returns of equities. Embrace it, don’t fear it.”
– Investment strategist
Investment trusts like the ones we’ve discussed are built for the long haul. Their managers aren’t day traders—they’re strategists with a vision for where the market is headed. By holding a diversified mix of global companies, they reduce the risk of any single stock tanking your portfolio. Plus, their ability to invest in private companies gives you exposure to growth opportunities that traditional funds often miss.
The Global Edge: Why UK Investors Should Think Big
One of the biggest advantages of these trusts is their global reach. While they’re listed in the UK, they invest worldwide, giving you exposure to fast-growing markets like the US, Japan, and Korea. The growth trust, for instance, has 55% of its portfolio in North America, home to some of the world’s most innovative companies. The value trust, meanwhile, has found success in Japan’s reforming corporate sector and is now eyeing similar opportunities in Korea.
This global perspective is crucial. The UK economy may face challenges, but the world’s markets are full of opportunities. By investing through these trusts, you’re not betting on the UK alone—you’re tapping into global growth. It’s like casting a wider net to catch the biggest fish, and it’s a strategy that’s worked for savvy investors for decades.
- Access global markets: Exposure to North America, Asia, and beyond.
- Diversify risk: Spread investments across industries and regions.
- Capture growth: Benefit from both public and private companies.
Timing the Market: Is Now Really the Time?
Timing the market is notoriously tricky, and I’ll admit, I’ve tried and failed more than once. But the stars seem to be aligning for UK equities in 2025. The FTSE 100’s projected climb to 10,000 is a psychological milestone, signaling confidence in the market’s trajectory. Falling interest rates are squeezing cash returns, making equities more attractive. And those NAV discounts on investment trusts? They’re starting to close, which could mean extra gains for early movers.
That said, no one’s saying it’s all smooth sailing. Economic uncertainty and fears of a fiscal crunch could create bumps along the way. But that’s where the long-term perspective comes in. By investing in trusts with proven track records and diversified portfolios, you’re positioning yourself to weather the storms and come out ahead.
How to Get Started
Ready to take the leap? Here’s a simple roadmap to start investing in UK equities through these trusts. First, do your homework—look at the trusts’ portfolios, their recent performance, and their investment philosophies. Second, assess your risk tolerance. If you’re comfortable with some volatility, the growth trust might be your speed. Prefer a steadier path? The value trust could be your anchor.
Finally, don’t try to time the market to perfection. Start small if you’re nervous, maybe allocating a portion of your portfolio to each trust. Over time, as you see the returns roll in, you can scale up. The key is to start now, before the discounts narrow further and the market’s momentum carries prices higher.
Investment Strategy Breakdown: 50% Growth Trust: High risk, high reward 50% Value Trust: Steady gains, lower volatility
In my experience, the hardest part of investing is taking that first step. But once you do, the possibilities open up. UK equities, through the lens of these two trusts, offer a chance to build wealth in a way that’s both exciting and grounded. So, what are you waiting for? The market’s calling—will you answer?
