Experts' 2013 investment trust tips off to strong start

Each calendar year we ask five trust experts to pick three trusts for us: one each for income, growth and speculative growth.

Scottish Oriental Smaller Companies has made the strongest start to 2013, and its sponsor, Keiran Drake of Winterflood Securities, suggests it could be time to take some profits. He reports that manager Susie Rippingall believes mid to smaller Asian shares are looking fully valued, and fears the premium on the shares could come under pressure if there is a setback. He is also slightly concerned that when Rippingall retires this month, the trust will be managed from Edinburgh rather than Hong Kong.

Drake's income pick of JPM Global Emerging Markets Income has also made a good start. His colleague Simon Elliott also nominated it for our September tips, and the two of them believe it remains attractive as it combines managed exposure to the world's faster-growing economies with a yield of over 3.5%.

Utilico Emerging Markets similarly offers a decent yield and exposure to emerging markets growth, albeit with a more specialist remit. However, Jean Matterson of Rossie House Investment Management has been selling some shares given the price rise since she first tipped it for us at the start of 2012.

Matterson is more enthusiastic about Baker Steel Resources, given that its large holding in Ivanplats is doing well and its troubled holding in Ferrous Resources is being bought into by Glencore International.

Impax Environmental Markets has made good ground. Charles Cade of Numis Securities believes it remains a good buy. "It is a well-managed trust in a sector that deserves to be more popular with investors, and its discount remains high. The managers are under pressure to bring it down before the continuation vote later this year."

Cade is similarly upbeat about Schroder Asia Pacific Fund, which was his contribution to our September tips. He says manager Matthew Dobbs spices up his value-oriented approach with some opportunistic purchases, and remains positive on the outlook.

Standard Life European Private Equity performed well for several of our experts in 2012 and has continued to do well in 2013, so James Burns of Smith & Williamson did well to retain it as his growth tip.

F&C Private Equity Trust is another of Burns' favourites. It too has a lot of exposure to Europe, and it is more highly geared than SLEPIT, so its end-December valuation should also be well up. Future dividends will be fixed at 4% of net assets, funded if necessary from realised gains, so this year's yield should be over 5% - an interesting option for income seekers.

Is it time for investors to pull back from more bullish choices? Fiona Hamilton finds out in: Aggressive investment trust gains call for protection.