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Investment Trusts Trounce Unit Trusts
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Ark_Welder wrote: »
ehhhmmm ok, i'm sure you're trying to make a point. but these are just posts you've made before?
it might be better if you try and present your arguments slightly better.
if you're happy with UTs fair enough. but if you invested your money in a tracker the fees you pay will go down. if you shifted your portfolio you might save enough for a McDonalds meal and a trip to the cinema each year......0 -
ehhhmmm ok, i'm sure you're trying to make a point. but these are just posts you've made before?
it might be better if you try and present your arguments slightly better.
if you're happy with UTs fair enough. but if you invested your money in a tracker the fees you pay will go down. if you shifted your portfolio you might save enough for a McDonalds meal and a trip to the cinema each year......
Gawd he's slow, I think you are wasting your time AW. If you read the posts you will find that Mr Welder isnt "a UT investor". He does invest in ITs, where the IT is the appropriate investment. As incidentally do I.0 -
Gawd he's slow, I think you are wasting your time AW. If you read the posts you will find that Mr Welder isnt "a UT investor". He does invest in ITs, where the IT is the appropriate investment. As incidentally do I.
'Course he is. Trolls are slow
Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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...Mr Welder...
Cor!! Rispec' 2 da Linton! :cool:
'Mister' is far more polite than some of the things that I get called at home...!
Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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Just read this whole interesting thread and really learnt a few things along the way about structures and charges. And that blanket assertions are a pretty blinkered view of the world. Personally believing that true star managers are rarer than hen's teeth, if ITs have generally slightly lower charges then it's no wonder that you can find figures over specific time periods that show a slight out-performance over UTs, since it seems unbelievable that they have a monopoly of better managers. And figures that show a greater out-performance. And figures to show some UTs out performing some ITs, since all ITs can't all be better. To a smaller or larger extent
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competitionscafe wrote: »Along with (lower) charges, gearing seems like a reasonable explanation for long term outperformance and can obviously work the other way round too:
"Investment trusts tend to lose more in downwards-moving markets because they have the ability to gear, but offset that by gaining more when markets rally.
For example, in the financial crisis, our data shows the average investment trust losing 47 per cent between August 2007 – when credit market froze – to March 2009, when markets bottomed out, while the average open-ended vehicle lost 23.7 per cent. "
http://www.trustnet.com/News/Research.aspx?id=274863
Although that also is skewed by the nature of investment trusts. There are a fair number that invest in property or private equity some of which hit 90% discounts to NAV in 2008/9. I'm not aware that there are many UTs that have the same remit so as a result the IT figures are going to show much greater average losses.
Statistics don't always show the true picture - ask most people if they have more than the average number of legs and they'll reply No. The true answer is actually yes as the average is something like 1.9999 which shows how misleading an average can be.Remember the saying: if it looks too good to be true it almost certainly is.0 -
There are some UTs/OEICs that hold direct property investments, but several of these had to suspend dealing during 2008/9 because they were unable to sell their assets to raise enough cash to meet the redemptions. A similar situation occured with some investment bonds and other unitised products.
UTs/OEICs that have frequent, i.e. daily or weekly, dealing are not suited to holding assets that are illiquid for the very reason that it may be next-to-impossible to sell enough of the assets, and quickly enough, when needed. These funds usually hold cash and listed property securities which can be quickly sold, and these buffers are normally enough to cope with the usual investor transactions.
PE open-ended funds tend to be outside the remit of the usual retail investor: non-UCITS compliant, high subscription levels, monthly dealing, sometimes offshore. Similar for hedge funds too.
If imvestment liquidity is required then these are best suited to a closed-end environment - but that is where the discount/premium becomes a factor.Living for tomorrow might mean that you survive the day after.
It is always different this time. The only thing that is the same is the outcome.
Portfolios are like personalities - one that is balanced is usually preferable.
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competitionscafe wrote: »"We fully appreciate that simply comparing sector returns can be misleading, and risks misrepresenting individual sectors and asset classes. We also appreciate the role of shorter-term trading strategies such as selling trusts when at a premium and buying a similar open-ended fund is not discussed. However, investment trusts are ideal vehicles for very long-term investors with either a willingness to take risk, in our opinion, or those that have a bias towards requiring income"
Source: http://www.investmentweek.co.uk/investment-week/feature/1590755/the-reasons-investing-closed-portfolio
Why suitable for 'very long term investors with a willingness to take a risk'? Because the gearing may mean the IT is volatile?
The thing that I don't like about unit trusts is that I dont know what price I am buying in at and when prices are uup and down as at present that makes me hesitate. Presumably there is no best time to put an order in?0 -
Trouble is, they are ignoring the fact that it is quite easy to get a rebate of part of the AMC on open-ended funds, by using platforms such as Alliance Trust Savings or you use an IFA who rebates. The TER assumes a full AMC, but this is at least 0.5% higher than the net TER, assuming you buy the open-ended funds in a smart way. I am a big fan of investment trusts, but I think you need to make a realistic comparison of TER's and in some cases investment trusts are not cheaper.competitionscafe wrote: »Another point on charges:
"Of the seven sectors.....investment trusts and companies are cheaper in six. The biggest difference is in the UK Income and Growth, Global Growth and Global Emerging Market sectors, with the closed-ended Global Emerging Market sector showing a TER of half of that offered by open-ended funds.
Source: http://www.investmentweek.co.uk/investment-week/feature/1590755/the-reasons-investing-closed-portfoliokoru0 -
I came across the following analysis which perhaps suggests that it is not so easy to eliminate the dogs: https://advisors.vanguard.com/iwe/pdf/ICRWMF.pdf?cbdForceDomain=falseif major firms outperformed other firms would you not expect some academic evidence of this?
What this analysis shows is that the star ratings given by Morningstar are a completely unreliable indication of likely future performance. If it were true that certain kinds of funds (such as little-known funds) are more likely to be poor performers, then you would expect that at any particular time they will have only one or two stars from Morningstar (stars being based mainly on past performance). And you would expect that these funds would remain on the same star rating. But in fact, they are more likely to perform better than the market over the next three years than funds with a higher star rating.koru0
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