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    • Sue58
    • By Sue58 10th Oct 17, 2:30 PM
    • 90Posts
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    Sue58
    Additional Global IT
    • #1
    • 10th Oct 17, 2:30 PM
    Additional Global IT 10th Oct 17 at 2:30 PM
    I currently hold SMT & Witan and I am looking at adding another Global IT to the portfolio (Bankers or maybe Brunner?). This is so that I can increase my holdings in some oil companies such as BP and Royal Dutch Shell, as well as hold some other companies that the SMT and Witan don't hold/cover.

    So the question is should I just continue with SMT and Witan or is it plausible to hold another Global IT for the reasons mentioned above? Any comments/views that I can consider would be appreciated. Thanks.
Page 1
    • coyrls
    • By coyrls 10th Oct 17, 2:44 PM
    • 922 Posts
    • 966 Thanks
    coyrls
    • #2
    • 10th Oct 17, 2:44 PM
    • #2
    • 10th Oct 17, 2:44 PM
    You seem to be very active in buying additional trusts; this is your third post in three months asking for opinions on new funds. Once youíve settled on what you want to hold, it would probably be a good idea to reduce the churn in your portfolio.
    • ArchBair
    • By ArchBair 10th Oct 17, 6:00 PM
    • 52 Posts
    • 12 Thanks
    ArchBair
    • #3
    • 10th Oct 17, 6:00 PM
    • #3
    • 10th Oct 17, 6:00 PM
    I currently hold SMT & Witan and I am looking at adding another Global IT to the portfolio (Bankers or maybe Brunner?). This is so that I can increase my holdings in some oil companies such as BP and Royal Dutch Shell, as well as hold some other companies that the SMT and Witan don't hold/cover.

    So the question is should I just continue with SMT and Witan or is it plausible to hold another Global IT for the reasons mentioned above? Any comments/views that I can consider would be appreciated. Thanks.
    Originally posted by Sue58
    For most people a blend of SMT and WTAN would be enough, however, if you feel that BNKR offers you some extra/different holdings such as BP & RDSA then that is fine as well. It's all just personal preference and there's nothing wrong with doing all your research before making a final decision.
    • greatkingrat
    • By greatkingrat 10th Oct 17, 6:43 PM
    • 69 Posts
    • 74 Thanks
    greatkingrat
    • #4
    • 10th Oct 17, 6:43 PM
    • #4
    • 10th Oct 17, 6:43 PM
    I don't really understand the reasoning. If you decide to invest in an active fund / IT then you presumably have faith in the managers stock picking abilities so if the managers of SMT have decided that BP or Shell do not represent value at the moment why do you want to override that?

    Plus even if you buy a trust that holds BP or Shell now, for all you know they might decide to sell those companies next week or next month anyway.

    If you really think oil companies are going to do well in the future, it would probably be better to just buy some BP and Shell shares directly.
    • Audaxer
    • By Audaxer 10th Oct 17, 7:00 PM
    • 628 Posts
    • 277 Thanks
    Audaxer
    • #5
    • 10th Oct 17, 7:00 PM
    • #5
    • 10th Oct 17, 7:00 PM
    I'm no expert, but I've just looked at both these ITs on Morningstar Xray and they both only hold between 1% and 2.5% of their portfolios in BP or Royal Dutch Shell, so it is really worth it buying another IT just to get that amount of exposure to these companies and a few others like them that they hold?
    • ArchBair
    • By ArchBair 10th Oct 17, 7:41 PM
    • 52 Posts
    • 12 Thanks
    ArchBair
    • #6
    • 10th Oct 17, 7:41 PM
    • #6
    • 10th Oct 17, 7:41 PM
    I thought the OP was just citing BP & Royal Dutch Shell purely as examples because she also mentioned 'as well as hold some other companies that the SMT and Witan don't hold/cover'.

    Maybe the OP can confirm this?
    • AnotherJoe
    • By AnotherJoe 10th Oct 17, 8:15 PM
    • 7,664 Posts
    • 8,277 Thanks
    AnotherJoe
    • #7
    • 10th Oct 17, 8:15 PM
    • #7
    • 10th Oct 17, 8:15 PM
    I would revisit your plan to hold more of these fossil fuel companies that have a very poor future due to the forthcoming electric car revolution which will drop oil consumption by about 30% by the mid 2020’s. There are even recent S&P ETF’s that specifically exclude fossil fuel companies, worrying they will be left with stranded assets in the very high multi billions.

    But if you wanted to hold them, why buy ITs, for which you are paying a premium for their expertise, buy the shares.

    Edit ; hot off the press, the Dutch (home of Shell !! ) , plan to ban sales of conventional cars in just 12 years time.
    https://electrek.co/2017/10/10/netherlands-dutch-ban-petrol-diesel-cars-2030-electric-cars/
    Last edited by AnotherJoe; 10-10-2017 at 9:30 PM.
    • Alexland
    • By Alexland 10th Oct 17, 10:48 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    • #8
    • 10th Oct 17, 10:48 PM
    • #8
    • 10th Oct 17, 10:48 PM
    If you buy enough active funds and/or ITs you just end up with a franken-indexer where none of the proportions are sensible and no individual manager would be able to explain your underlying portfolio. If you want to own the whole market use index funds else trust the manager.
    • ArchBair
    • By ArchBair 11th Oct 17, 5:27 PM
    • 52 Posts
    • 12 Thanks
    ArchBair
    • #9
    • 11th Oct 17, 5:27 PM
    • #9
    • 11th Oct 17, 5:27 PM
    I would revisit your plan to hold more of these fossil fuel companies that have a very poor future due to the forthcoming electric car revolution which will drop oil consumption by about 30% by the mid 2020ís. There are even recent S&P ETFís that specifically exclude fossil fuel companies, worrying they will be left with stranded assets in the very high multi billions.
    Originally posted by AnotherJoe
    Presumably, the Managers of IT's such as Bankers and Brunner and OEIC Funds such as Liontrust Special Situations, Royal London Equity Income, Trojan etc who all hold oil companies like Royal Dutch Shell & BP are aware of this but still continue to have them in their top 10 holdings?
    • bostonerimus
    • By bostonerimus 11th Oct 17, 5:33 PM
    • 1,211 Posts
    • 668 Thanks
    bostonerimus
    Fund multiplication often happens and can start to make management complex and obscure your overall strategy. You simply don't need to own little bits of lots of things. Doing it with ITs (IMHO) is compounding the error.
    Misanthrope in search of similar for mutual loathing
    • AnotherJoe
    • By AnotherJoe 11th Oct 17, 8:42 PM
    • 7,664 Posts
    • 8,277 Thanks
    AnotherJoe
    Presumably, the Managers of IT's such as Bankers and Brunner and OEIC Funds such as Liontrust Special Situations, Royal London Equity Income, Trojan etc who all hold oil companies like Royal Dutch Shell & BP are aware of this but still continue to have them in their top 10 holdings?
    Originally posted by ArchBair
    They probably donít agree with that forecast or those are income funds and the income is hard to turn down? Just like OPEC think electric cars will be 10% of the market by 2050 when it will most likely be game over for gasoline engines ten years previously at least.

    There are plenty of examples of so called experts who fail to see the revolutionary new technologies that destroyed their businesses. Kodak, Nokia being two recent examples. The smart people at Arthur Andersen (IIRC) advised AT&T in the mid 1980s not to invest in mobile technology as they thought the total market by 2000 would be 900,000 users. It was 109 million. And now I think itís uo to a billion, anyway by the late 90s it was as too late for AT&T to get into it.

    Or in this industry look at the German company RWE who a few years back invested Ä10Bn which was lost a year later when the project started they invested in were derailed by new wind power and solar. They even instituted a root and branch analysis to see why they made those poor investments, essentially, they were too blinkered about business as usual to look outside and see the rapid advances being made.

    And whose the big expert in funds who recently screwed up and didnít see the Prudentual fiasco coming and was buying their shares like it was a going out if fashion ? Forget his name.

    Finally, maybe Shell do get it they are starting to roll out electric charging stations at their petrol stations. Whether that will make a difference I doubt but who knows.
    • bigadaj
    • By bigadaj 12th Oct 17, 2:43 AM
    • 10,804 Posts
    • 7,098 Thanks
    bigadaj
    They probably donít agree with that forecast or those are income funds and the income is hard to turn down? Just like OPEC think electric cars will be 10% of the market by 2050 when it will most likely be game over for gasoline engines ten years previously at least.

    There are plenty of examples of so called experts who fail to see the revolutionary new technologies that destroyed their businesses. Kodak, Nokia being two recent examples. The smart people at Arthur Andersen (IIRC) advised AT&T in the mid 1980s not to invest in mobile technology as they thought the total market by 2000 would be 900,000 users. It was 109 million. And now I think itís uo to a billion, anyway by the late 90s it was as too late for AT&T to get into it.

    Or in this industry look at the German company RWE who a few years back invested Ä10Bn which was lost a year later when the project started they invested in were derailed by new wind power and solar. They even instituted a root and branch analysis to see why they made those poor investments, essentially, they were too blinkered about business as usual to look outside and see the rapid advances being made.

    And whose the big expert in funds who recently screwed up and didnít see the Prudentual fiasco coming and was buying their shares like it was a going out if fashion ? Forget his name.

    Finally, maybe Shell do get it they are starting to roll out electric charging stations at their petrol stations. Whether that will make a difference I doubt but who knows.
    Originally posted by AnotherJoe
    I think you're making too much of technological advances and not enough of the political element.

    The reason that renewables are growing is down to the political will and things like taxation, that's a reasonable view and one that people have to consider, though whether it's the magic wand that will put an end to climate change is another matter.
    • AnotherJoe
    • By AnotherJoe 12th Oct 17, 11:52 AM
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    AnotherJoe
    I think you're making too much of technological advances and not enough of the political element.

    The reason that renewables are growing is down to the political will and things like taxation, that's a reasonable view and one that people have to consider, though whether it's the magic wand that will put an end to climate change is another matter.
    Originally posted by bigadaj
    Nope, the reason that renewables are growing is that they are now cheaper than many fossil fuels. That is without subsidies.

    Thats only changed over the past 2 or so years so its easy to miss, and its also easy to underestimate technological change when its exponential, eg solar cost has been dropping at roughly 12-15% efficiency over the past 30 or so years. That might seem small beer, but its accumulated year on year, it means that (I'm remembering these numbers so might be a bit off) a unit of power than cost $100 in the 1970's is now $1, and once you fall under a threshold of cost, all of a sudden its renewables all the way, because fossil fuel costs by and large arent falling.



    This kind of step change is catching many out.

    EDIT Look at this one showing how solar equates to other sources. Easy to see why you might have dismissed solar just a few years ago.



    And, what I've read recently is that not only is solar and wind now cheaper, they are just about now crossing the threshhold where a new installation of wind / solar can be cheaper than just paying for the running costs of an old fossil fuel plant.

    I think Einstein said that compound interest is the most powerful force in the universe. Well, this is an example of that.
    Last edited by AnotherJoe; 12-10-2017 at 12:03 PM.
    • bigadaj
    • By bigadaj 12th Oct 17, 12:27 PM
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    bigadaj
    Einstein never said that, but it's annoyingly quoted very often.

    Political risk comes in many forms, the vast majority of solar and wind production comes out of China, so being largely reliant on them is in itself a massive political risk. More so than fossil fuel out of the Middle East for example, for the us at least.

    The correct approach in almost all situations is to not go for one solution, and the correct approach is to diversify, some legacy fossil fuel generation makes sense, to go 100% for renewables is just as risk as going all fossil fuel, all nuclear etc

    Edit - your references also make no note of the heavy tax on fossil fuel in most developed economies now, just look at fuel in the uk, taxation makes up 80% of the cost at the pump.
    Last edited by bigadaj; 12-10-2017 at 12:31 PM.
    • Alexland
    • By Alexland 12th Oct 17, 2:54 PM
    • 731 Posts
    • 459 Thanks
    Alexland
    Einstein said it was fine to quote him on anything if it helped prove a point.
    • AnotherJoe
    • By AnotherJoe 12th Oct 17, 4:02 PM
    • 7,664 Posts
    • 8,277 Thanks
    AnotherJoe
    Political risk comes in many forms, the vast majority of solar and wind production comes out of China, so being largely reliant on them is in itself a massive political risk. More so than fossil fuel out of the Middle East for example, for the us at least.

    The correct approach in almost all situations is to not go for one solution, and the correct approach is to diversify, some legacy fossil fuel generation makes sense, to go 100% for renewables is just as risk as going all fossil fuel, all nuclear etc

    .
    Originally posted by bigadaj
    China is certainly the biggest producer of solar panels, or their constituents. But theres a lot of wind energy being produced in N Europe (I dont know where the turbines themselves are made, they are pretty big so generally relatively local I'd have thought)

    In any case, we arent reliant on them in the same way we are reliant on ME oil. Once you've got a turbine or a solar panel it doesn't matter where it comes from, the energy flows, unlike if you are importing oil.

    Windpower is displacing coal in the UK. I agree we need diverse sources for the time being (there are other approaches to get round that) , but that by itself implies more solar and wind, less coal and oil.



    Edit - your references also make no note of the heavy tax on fossil fuel in most developed economies now, just look at fuel in the uk, taxation makes up 80% of the cost at the pump.
    Originally posted by bigadaj
    Well that just makes the case even more doesn't it? AFAIK those numbers are tax / subsidy free apart from anything integral which might well include fossil where i think there are a lot of hidden subsidies, not to mention the way they impose their external costs on others.

    In any event, whatever the numbers are precisely, the point is that as renewable costs continue to fall *, and fossil doesnt, and usually cant, the writing is on the wall and getting back to the point of this thread, that doesn't bode well for Shell and BP.

    Maybe they can pivot quickly into new technologies, i know they do talk about it, and Shell rolling out chargers for cars at service stations is an interesting sign, whether they can walk the walk remains to be seen.
    • bigadaj
    • By bigadaj 13th Oct 17, 12:57 AM
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    bigadaj
    I think you are very naive to assume those numbers you quite are tax or subsidy free, they may well be US biased which would reduce the effect of fuel tax substantially, but not knowing the basis on which people are providing statistics is very poor, particularly in an area such as environment where the vast majority of research is biased one way or the other.

    I'm not sure why you think large objects are produced locally, the cost of shipping is relatively low so producing goods in low labour economies is still far cheaper than anywhere in Northern Europe.

    With respect to there's still the research that shows that the energy production form a turbine is net negative when you take production, construction and maintenance costs into account, offshore wind prices have fallen dramatically but only recently come below new nuclear.

    Diversification is key, it's incredibly stupid to just rely on a single source such as renewables as you are then a hostage to fortune. It's incredibly sad that in the uk we haven't been able to make an industry fro wave or tidal, but no just piggyback in inappropriate technology because we have lost any sort of risk or innovation that was the hall mark in Victorian times. We have the second highest tidal range in the world, with huge amounts of free energy going begging, but we'll try solar, brilliant.

    The problem with renewables, at least the solar or wind everyone is espousing, is that it is unreliable. There was huge play earlier this year abiut national grid being 100% renewable, but that was for a few hours at most. When the sun doesn't shine and the wind doesn't blow, or indeed blows too hard, everyone's lights turn off, unless you have coal, gas, oil, nuclear etc

    It's classic British ignorance, we want all the nice fluffy renewables but when we realise this comes at a generation and convenience costs then we'll companion like hell, and just moan about the government, evil power companies, etc etc
    • greenglide
    • By greenglide 13th Oct 17, 11:19 AM
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    greenglide
    I'm not sure why you think large objects are produced locally, the cost of shipping is relatively low so producing goods in low labour economies is still far cheaper than anywhere in Northern Europe
    i believe that they are built or planned on the Tyne, the Humber at the very least as well as multiple locations in Europe.

    Someone obviously thinks there is money to be made by manufacturing in Europe.

    Clearly renewables can only be used in isolation if we have a viable storage system and we are a fair distance from that yet but that doesn't mean we can't use renewables alongside convential power generation.

    unless, of course, we want to be climate change deniers and bury out heads in the sand.
    • IanSt
    • By IanSt 14th Oct 17, 9:52 AM
    • 149 Posts
    • 104 Thanks
    IanSt
    Clearly renewables can only be used in isolation if we have a viable storage system
    Originally posted by greenglide
    This was the big reason why I thought renewables wouldn't catch on in any but niche areas in the UK, but with the amount of money that I see going into electric vehicle research then I reckon battery storage systems could prove me wrong.
    • bigadaj
    • By bigadaj 14th Oct 17, 11:50 AM
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    bigadaj
    This was the big reason why I thought renewables wouldn't catch on in any but niche areas in the UK, but with the amount of money that I see going into electric vehicle research then I reckon battery storage systems could prove me wrong.
    Originally posted by IanSt
    It's a political as well s an environmental issue, there's now an urgency to phase out ice vehicles on the relatively near future.

    You'd expect the large oil majors to be pushing forward in this area, whether they'll be successful is another matter. I'd have more confidence in BP or Shell than Exxon for example, the aramco listing seems like a last grasp dash with no prospect of innovation, however when you're pumping oil for cents per barrel then they'll always be some market I guess.
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