uk small cap investment trusts?

12tonelizzie

uk small cap investment trusts?

pressuredrop_2

Trustnet accounts are useful. Plot away.

Or plot against OEICs at HL.

Ark_Welder

The AIC web-site will give you a list of its members and you can click on the names to see background information to the company

www.theaic.co.uk -> 'Search for an IC' link -> 'Specialist Sector Search' -> 'UK Smaller companies'

Trustnet can be used for plotting, but works on the share price, whereas the net asset value is more relevant: it reflects performance of the assets but the share price reflects investor demand - or lack of.

Discount/premium should be taken into consideration for both individual companies and for their sector. If the sector as a whole is at a discount then it is out of favour with investors, so an individual company at a discount need not be a concern. If a company is at a discount or premium that is out of kilter with the sector then it may reflect good or bad news that is not yet reflected in an up-to-date NAV. Or it may mean that the particular manager is better or worse than the competition.

I haven't found a tool that plots against NAV, but I haven't tried very hard either....

Linton

12tonelizzie wrote: »

UK small cap seems to be a problem area for the index investor, but if the point of investment is to participate in the growth of businesses it seems nuts to miss out on this sector.

So I'm trying to learn about investment trusts, e.g. Standard Life, Aberforth and Henderson. The H-L site doesn't seem to let me plot them on one chart like OEICs. Can anyone tell me the main things to look out for and where they're listed? (Should I be comparing their charges? Where are the charges listed? Should I be doing sums with discounts and premiums? etc.)

I would agree that Small Companies is an important area for investors looking for long term growth.

Investment Trusts are normal quoted shares so any site that lets you plot share prices will handle ITs. Such sites will also supply information on dividends if that's what you happen to want.

Also Trustnet has a section on ITs.

Why not look at Small company OEICs/Unit trusts. I have held Old Mutual Select Smaller Companies for 9 years - average annual return 16%. At that return it really doesnt concern me that if it was an IT it may have got me a few % more.

JamesU

12tonelizzie wrote: »

UK small cap seems to be a problem area for the index investor.......

There are quite a few tracker possibilities based on FTSE 250 mid cap index (but not small cap, see posts below), such as:

etfs: ishares MIDD, HSBC HMCX (both replicated)
etfs: Lyxor L250, db-xtracker XMCX (care, synthetic)
index fund: HSBC FTSE 250

And if you want to check out UK small cap investment trusts, link here:
http://www.trustnet.com/Investments/SectorProfile.aspx?code=T:USC&univ=T

JamesU

JamesU

12tonelizzie wrote: »

Surely the FTSE 250 is mid cap? My understanding is that true small cap is not well served with trackers.
I have the HSBC All-Share tracker, which tracks the aggregation of the FTSE 100, 250 and SmallCap indices. It's capitalisation-weighted, which I assume means that my small cap exposure is a bit feeble.

Yes, you are quite right, FTSE 250 is midcap, I was in autopiliot in the last post (have ammened to midcap). FTSE allshare = FTSE 100, 250, and small cap, and small cap will be feeble based on market cap weightings as you say. Also note FTSE all share does not include the FTSE fledgling, below £10M market cap companies. The true small caps account for around 2% of FTSE allshare, companies with market cap below £500M, and there is no tracker for this, just checked. According to one of the ref books (FT etf and index funds, p.287), the abscence of a UK small cap tracker is a practical/cost issue due to sector bias (many sectors where the companies have higher market cap and hence not included) and the amount of cash investment required to cover around 2000 companies.

12tonelizzie wrote: »

Thanks. My guess is that true small cap would be one area where I should expect a manager to earn their keep doing lots of research that's beyond me. And if ITs have lower charges and are less clumsy to manage than OEICs, it seems that including a small cap IT with a decent track record would be a sensible first step into the managed world.

Depends on your view and objective I guess. For sure, the ITs in the Trustnet link in last post (e.g. Standard Life) will cover this UK small cap niche. Similarly ITs on FTSE fledgling (but make sure they exlcude other ITs from the IT itself!). Personally though, rather than UK, I feel the growth prospects for non-UK small caps are better. Might be worth plotting say Standard Life FTSE UK small cap IT against some of these non-UK small caps etfs. They had a good run from around Aug 2010 onwards. The general non-UK small caps which I follow closely as global small cap indicators (with UK comparison against FTSE 250 MIDD, albeit mid-cap) are ISP6 (US), IEMS (EM) and DJSC (EU). I have a preference for DJSC and IEMS based on fund allocations and prospects. Plenty of others which are more country specific depending on risk profile and objective.

JamesU

sabretoothtigger

UK small cap seems to be a problem area for the index investor

FT250 is small enough. Its going down to 300m size.
You are going to find it very hit and miss going smaller then that. Standard life is a fund Ive heard a few times but really buying an entire fund of small cap seems very risky.

Closest I own is a junior oils fund with 38m size companies and true enough it lost 30% YTD even though oil is a massive growth industry. Very unusual to put pension or sensible savings into such a thing

JamesU

12tonelizzie wrote: »

Actually I do have Vanguard's VIGSCA, tracking the MSCI World Small Cap Idx. This includes UK, but I assume not much. Perhaps I have the exposure I want already...

Not sure what overall exposure you are looking for, or at what % allocation. But as Sabre mentions, small cap are high risk (btw, nice link in post Sabre), so global exposure through Vanguard to diversify at a % allocation that suits risk profile seems very sensible to me.

That Vanguard tracker is not bad at all, global coverage at reasonable cost. But I am not keen on this one myself. Out of curiosity, what provider did you use to purchase VIGSCA, and was it lump sum or by cost averaging?

JamesU

Thrugelmir

Why restrict to UK only? I have followed F&C Global Smaller Companies PLC for many years. Has had a really good run recently though. Also has increased annual dividend every year for as long as I can remember.

Ark_Welder

12tonelizzie wrote: »

Criticism welcome; be [STRIKE]brutal[/STRIKE] reasoned and constructive.

..........

Thrugelmir

12tonelizzie wrote: »

No idea what you mean.

A UK listing does mean that the Company generates its profit from UK operations nor that its shares are not tightly controlled.

So trackers per se are no longer representative of the UK economy.