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Investment trusts have performed well over the past 12 months — here we identify the best

Investment trusts have delivered impressive returns in 2013.

Often overlooked by private investors and professionals — partly because they spend little or no money on marketing — these funds are structured as companies in their own right with their shares traded on the London Stock Exchange.

They then invest in other shares according to their mandate, often managing at comparatively low cost.

According to the Association of Investment Companies, the trade body for the investment trust industry, the average fund has returned 16pc over the past year.

But some trusts have performed far better.

Shrewd investors that were willing to take a gamble on shares in Europe, despite its poor financial prospects a year ago, have made handsome returns. The typical investment trust which holds shares in European smaller companies has turned £10,000 into £15,260 over the period — a return of over 50pc.

Japan funds have also performed strongly, with the average returning 51pc. Economic reforms by the Japanese government aimed at rejuvenating the world’s third-largest economy have been warmly received by investors. The Japanese stock market as measured by the Nikkei index has been one of the best performing stock markets in 2013, having produced gains of 65pc.

Best performing parts of the market in 2013

Sector One year return European Smaller Companies 52.6pc Japan 51.1pc Property Direct Asia Pacific 44.8pc UK Smaller Companies 44.8pc Japanese Smaller Companies 44.6pc But top of the charts is an investment trust which has no investments in Europe or Japan. instead, it focuses on Chinese property. The Macau Property Opportunities investment trust has made gains of 85pc in 2013. The company makes the majority of its money from renting properties in Macau, in turn benefiting from strong levels of tourism, particularly from Chinese visitors to Macau’s casinos.

In second place in the standings is the Baillie Gifford Japan fund, which is up 80pc over the year. Another Japan fund from the same fund management company — Baillie Gifford Shin Nippon — also features in the top five, having posted a return of 70pc.

Another strong performer is the Blue Planet International Financials fund, up 72pc. The fund has made big gains on the back of the strong performance from UK bank shares over the past year, boasting big positions in Lloyds Banking (Xetra: LLD.DE — news ) Group, Royal Bank of Scotland (LSE: RBS.L — news ) and Santander.

Completing the top five is the Henderson Opportunities, managed by James Henderson. The fund invests in small UK business, which offer greater returns but are a riskier bet compared to blue-chip firms, such as Vodafone, which are found in the FTSE 100. Mr Henderson has returned 67pc in 2013, profiting on positions in ITV (LSE: ITV.L — news ). Senior and Ashtead Group (LSE: AHT.L — news ).

Best performing investment trusts in 2013

Investment trust One year return Macau Property Opportunities 85pc Baillie Gifford Japan 80pc Blue Planet International Financials 72pc Baillie Gifford Shin Nippon 70pc Henderson Opportunities 67pc • New to investment trusts? Read our guide

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