This makes them suitable for investors tempted by emerging markets, because they should only have exposure to this area of the market if they are prepared to invest for the long-term.
With this in mind, FE Trustnet highlights five trusts that provide access to high-growth opportunities in emerging markets.
Templeton Emerging Markets
Kieran Drake, analyst at Winterflood Securities, recommends the £2.1bn Templeton Emerging Markets trust for broad exposure to the sector.
"The trust is managed by Mark Mobius, who has a very strong reputation in emerging markets," he said. "It’s a low-turnover buy-and-hold strategy."
Charles Cade, investment trust analyst at Numis Securities, says the Templeton trust is an attractive vehicle for providing core exposure to emerging markets.
It has outperformed the MSCI Emerging Markets index over one, three, five and 10 years.
Over the last decade, it has made 635.17 per cent while the index is up 389.64 per cent, according to FE Analytics.
Performance of trust vs index over 10yrs
Source: FE Analytics
More than half of the fund is invested in the Pacific basin, with Chinese oil and gas company PetroChina, Chinese auto manufacturer Brilliance China Automotive and Thailand-based Siam Commercial Bank featuring in its top-10 holdings.
It is trading on a discount of 7.7 per cent, which Drake says is fairly typical for the trust.
It has a nominal yield of 0.87 per cent and is not geared. It has a total expense ratio (TER) of 1.31 per cent.
JPMorgan Global Emerging Markets Income Trust
For an income-oriented approach to emerging markets, Drake recommends the JPMorgan Global Emerging Markets Income IT.
"The trust gives investors a way of diversifying their income exposure outside the UK," he said.
The £277.1m trust is trading on a slight premium of 2.7 per cent and is 8 per cent geared, according to the AIC.
It was launched in July 2010 and has been managed by Richard Titherington since this time.
Over that period, the trust has returned 38.69 per cent while the MSCI Emerging Markets index is up 13.78 per cent.
Performance of trust vs index since launch
Source: FE Analytics
It is currently yielding 3.7 per cent – the highest in the IT Global Emerging Markets Equities sector.
The fund’s largest holding is the Bank of China, but its highest sector weightings are to telecommunications and technology stocks – at 23.9 per cent – and consumer products – at 21.6 per cent.
The trust has a TER of 1.32 per cent.
Genesis Emerging Markets
Another trust that provides good core exposure to emerging markets is the four crown-rated Genesis Emerging Markets IT, according to Cade.
It is trading on a discount of 3.2 per cent and is not geared. It carries a TER of 1.7 per cent, according to FE Analytics.
Over the last decade, the trust has returned 671.09 per cent, compared with 388.68 per cent from the MSCI Emerging Markets IMI index.
Performance of trust vs index over 10yrs
Source: FE Analytics
The trust has slightly underperformed the index over five years, however, it has returned double over one and three years.
The Guernsey-domiciled trust is tilted toward financials, with 26 per cent in the sector. Major blue chips such as Samsung Electronics, Tullow Oil and Taiwan Semiconductor feature in the trust’s top-10 holdings.
BlackRock Greater Europe IT
Outside of the broader emerging markets funds, Cade says it is a good idea for investors to focus their emerging markets exposure to a targeted region or country.
For this reason, he likes the BlackRock Greater Europe IT, which has exposure to countries in emerging Europe.
"The discount control mechanism has been effective for [the trust], which consistently trades at a tighter discount than its peers (currently 3 per cent compared with 8 per cent)," Cade said.
"The fund has a strong long-term track record and a diversified retail shareholder base, giving it scope to continue to act as a consolidator among the European investment trusts."
The trust is trading on a discount of 2.5 per cent and is currently geared at 2 per cent. It is the least expensive trust in this list, with a TER of just 0.55 per cent.
It has beaten the FTSE World Europe ex UK index over one and three years and more than doubled its returns over five.
Performance of trust vs index over 5yrs
Source: FE Analytics
The fund is primarily invested in consumer products, followed by industrials and financials. Outside of core Europe, Russia is the trust’s biggest regional bet, at 5.7 per cent of AUM.
It is headed up by BlackRock’s Sam Vecht and Vincent Devlin.
Fidelity China Special Situations
For all-out single-country exposure, Cade tips Anthony Bolton’s Fidelity China Special Situations trust.
"Fidelity China Special Situations had a good [fourth quarter] and we see it as a bull market play on China given its leverage of about 20 per cent and focus on mid/small caps," he said.
However, Cade says the trust is not for the faint-hearted.
"We regard Anthony Bolton as one of the best managers that has been involved in the investment trust sector in recent years, but the resources dedicated to this fund are relatively small and we believe that the risk profile is higher than many investors appreciated at launch."
Since launch, the trust has lost 5.73 per cent, while the MSCI China index has gained 2.63 per cent, according to FE Analytics.
Performance of trust vs index since launch
Source: FE Analytics
Despite the trust’s controversial track record, it is only trading on a slight discount of 1.6 per cent.
It is geared at 21 per cent, according to the AIC, and has a TER of 1.7 per cent.