Investment trust veteran Peter Walls believes that 2011 will be another strong year for the sector.

Collectively, investment trusts saw their share prices climb by some 20% last year while discounts narrowed by roughly 3%.

‘Although discounts are unlikely to come in further in 2011, looking toward 2012 and 2013, with RDR, investment trusts ought to be given more prominence,’ Walls, who runs Unicorn Asset Management’s Master Trust, said.

The fund is one of the top performers in the fund of investment trust sector, and over the last three years Walls has returned 5.6%, versus the FTSE Investment Companies TR index which fell 1.7%.

Walls is hoping to continue his strong run with bets on Japanese smaller companies trust, Baillie Gifford Shin Nippon and through commodities holding, the BlackRock World Mining Trust.

‘Japan is the contrarian’s favourite bet but I see a strong recovery in corporate earnings [there], valuations that are at historic lows and increased corporate activity,’ Walls explained.  ‘I like commodities and hold trusts such as City Natural Resources and BlackRock World Mining, and I hold these in preference to global emerging markets,’ Walls added.

‘I fully buy into the idea of where GDP growth is coming from but that does not necissarily mean equity markets will perfrom in tandem with that.’

To hear more from Walls click on our video.