are investment trusts an investing style?

pressuredrop_2

Yup, pleasant NAV/OEIC performance.

Troy Trojan 0.5% dilution levy. Oh well.

PAT. RICA. Yup.

Ark_Welder

Ark? Ark?

Either you expect to Hear The Herald Sing or have a demented seal in mind :rotfl:

From this Weekend's Personal finance section in the FT:

Impact of Fund Fees Revealed: Investment Trusts return more than Unit Trusts over all time periods.

On their web-site now, which has limited access with a free registration.

Thrugelmir

Ark_Welder wrote: »

Perhaps it is because ITs are less widely used and those that do go in with a more positive approach?

Insurance Companies for example use IT's to broaden their investment portfolio. Particularly for gaining exposure to specialist areas such as Private Equity or Smaller Companies.

As long term holders buying at a significant discount to asset value is an obvious bonus.

So not limited to the retail arena.

Ark_Welder

Actually, a bit of a rhetorical question. Whilst some institutions do retain an interest in them (L&G being prominent), their use by them has diminished over the years due to a move to direct investment by the institutions. I exclude arbitrageurs from this statement.

But the bonus of buying at a discount will only occur if a sale is made at a time when the discount has narrowed.

My longest-held IT was bought 12 years ago. I've added to it and reduced my holding at times, but see no reason to sell. Not sure if it was the first one (don't think it was, somehow), my records of sold investments before then are archived elsewhere. Might be interesting to dig them out sometime (for me that is!!)

Thrugelmir

Ark_Welder wrote: »

Actually, a bit of a rhetorical question. Whilst some institutions do retain an interest in them (L&G being prominent), their use by them has diminished over the years due to a move to direct investment by the institutions. I exclude arbitrageurs from this statement.

If you take Graphite Enterprise Trust for example (Private equity in the F&C stable). Non retail investors are analysed as follows:-

Investment companies - 62 (number of investors) - 20.3% (shareholding)
Insurance companies - 23 - 6.8%
Private Equity - 2 - 5.1%
Banks - 12 - 2.2%
Pension funds - 7 - 1.9%
Other - 4 1.4%

Thrugelmir

Ark_Welder wrote: »

But the bonus of buying at a discount will only occur if a sale is made at a time when the discount has narrowed.

Institutions have no need to sell.

What is gained is an enhanced yield on the initial investment.

Ark_Welder

If you take Graphite Enterprise Trust for example (Private equity in the F&C stable). Non retail investors are analysed as follows:-

...with private equity being a rather specialist sector. Whereas institutional holdings in more mainstream areas such as global, uk growth and inc & growth have diminished over the years because they have found it easier and cheaper to manage shareholdings directly. This has been one of the major problems faced by investment trusts over a numer of years: how to replace institutional shareholders. Part of the response was to introduce savings schemes (by coincidence, firstly by F&C in 1984) and later, discount-control mechanisms to make them more attractive to retail investors that might be more familier with open-ended funds.

It could be argued that the invesment companies percentage should be excluded here because it represents other retail-oriented general investment trusts that are using the likes of GPE to bring some diversification for their own shareholders.

The Globe Investment Trust used to be the largest in the UK until a hostile takeover by the the British Coal Pension Fund in 1990. BCPF did this because they wanted the assets at a slight discount to NAV and so that they would reduce their own costs by removing a level of outside management charges. Institutional shareholdings in IT's since then have been in general decline.

Thrugelmir

Ark_Welder wrote: »

...with private equity being a rather specialist sector. Whereas institutional holdings in more mainstream areas such as global, uk growth and inc & growth have diminished over the years because they have found it easier and cheaper to manage shareholdings directly. This has been one of the major problems faced by investment trusts over a numer of years: how to replace institutional shareholders. Part of the response was to introduce savings schemes (by coincidence, firstly by F&C in 1984) and later, discount-control mechanisms to make them more attractive to retail investors that might be more familier with open-ended funds.

I quoted F&C earlier as happened to have their site open. Just picked on another trust in the stable - Investors capital. According to the 2011 accounts 41% is held by non retail investors. Same % as 2010. So still a significant %.

Ark_Welder

From 1999: http://www.guardian.co.uk/Money_Observer/Story/0,5499,77227,00.html

Do you have a breakdown of the types pf institutions in Investors Capital, i.e. how many are not other ITs and arbitrageurs?

I have been investing in ITs for about 20 years and have followed their fortunes over this time. Started off with F&C, as it happens.

Thrugelmir

Ark_Welder wrote: »

Do you have a breakdown of the types pf institutions in Investors Capital, i.e. how many are not other ITs and arbitrageurs?

I have been investing in ITs for about 20 years and have followed their fortunes over this time. Started off with F&C, as it happens.

Touche.

Held F&C IT for some 30 years now along with Global Smaller Companies for around 25. Bought Graphite when it originally listed. Though tend to trade this on the back of discount movements. The crash of 2008 being an opportune time to buy. Always been a fan of IT's. Now hold majority of my SIPP in IT's.

In my early working years used to keep the accounting records for the Friends Provident Life fund. So saw the evolvement of direct investment in Japanese equities at the expense of IT's. Also learnt that individual stock selection is never easy!