this weeks Investors Chronicle

moneylover

this weeks IC (free in your local library!) is a special issue on Investment Trusts
John Baron who regularly writes on ITs for the magazine has come up with a starter portfolio. I havent checked out the trusts yet but I would be interested to know what regular investors in ITs think of the selection - luckily this particular article is free online so I havent got to type them in! Mostly the trusts are at a discount but one of them, New City High Yield, is at a premium of 7.36

http://www.investorschronicle.co.uk/2011/09/19/funds-and-etfs/investment-trusts/getting-started-in-investment-trusts-qr3EfYKYM0fU9PScHxywkL/index.html

Ark_Welder

I would not buy NCYF at that premium when I can get equivalent OEICs at NAV. To cover the Far East you might want to look at separate trusts in the Japan and Asia ex Japan sectors (saying that, I do have Aberdeen All Asia at the moment and no single Japan offering - which I might rectify at some point).

Of the funds listed, I have never held NCYF, WPC and SMT - the latter purely because it doesn't fit in with my porfolio. Of the rest, I do not currently hold JEO or BRSC, and that is because I wanted to reduce some exposure and go a bit more defensive (more into RICA).

bigfreddiel

moneylover wrote: »

this weeks IC (free in your local library!) is a special issue on Investment Trusts

If only - its not in my local library (N Cornwall) - they also close on weds now and no more free parking!

BLB53

Thanks for the link moneylover.
A reasonable selection for starters but a bit 'woolley' on objectives.
I have invested in ITs for many years and I agree with the idea of going with long standing managers with good track record.
I do not hold any of the ones mentioned, but my focus is on generating a rising stream of income to beat inflation. I hold City of London, Murray Income, Schroder Inc Growth, Henderson Far East, Schroder Oriental and Scottish American. At current low prices, the yield is around 5%. I hold in an ISA so all the income is tax free and any income I don't need is reinvested.

BLB

moneylover

bigfreddiel wrote: »

If only - its not in my local library (N Cornwall) - they also close on weds now and no more free parking!

I was being a bit tongue in cheek, but am a librarian and like to push libraries. That said I am sure I will be replaced with a volunteer quite soon! Here in Chelmsford we do well with stock still, we are always getting phone calls for official share prices, look ups in Capital Gains Tax Service etc. But this kind of thing is really only available in large libraries these days.....

moneylover

Ark_Welder wrote: »

I would not buy NCYF at that premium when I can get equivalent OEICs at NAV. QUOTE]

What could I buy then thats good and equivalent either OIEC or IT? I would be very doubtful about the premium although presumably the market thinks NCYF is worth it.

Ark_Welder

moneylover wrote: »

What could I buy then thats good and equivalent either OIEC or IT? I would be very doubtful about the premium although presumably the market thinks NCYF is worth it.

It's stated objective is: 'To provide investors with a high gross dividend yield and the potential for capital growth by investing in high yielding fixed interest securities.'

So if high-yield is its aim then the Sterling High Yield sector would be a starting point. Perhaps one difference is the percentage held in convertibles, which I assusme is to provide more opportunity of capital growth. 57% exposure to Sterling.

A question that I would pose would be the purpose of holding a high-yield fund - either OEIC or IT. These bonds, along with convertibles, tend to show a higher correlation with equities than high-grade or sovereigns. (That is, at times when everything other than Treasuries, Bunds and Gilts aren't seen as the only safe havens and every other asset is 'at risk'.).

But 'high-grade' then has to be seen in the context of a 30-year bond bull-market and the current excessively low interest rates. So perhaps an answer might be in the Strategic Bonds sector, but this areas has its detractors too...Trustnet: Strategic Bond funds fail investors.

gadgetmind

Ark_Welder wrote: »

It's stated objective is: 'To provide investors with a high gross dividend yield and the potential for capital growth by investing in high yielding fixed interest securities.'

High-yield = more risk.

Fixed interest = value will fall if/when interest rates rise.

Quite a few high-yield vehicles, including some that don't mention fixed interest and give the impression they are UK equity funds/ITs, have been buying banking prefs to boost their yield. Fair enough, I hold some banking prefs myself, but there is plenty of risk involved.

What's their sharpe ratio?

Ark_Welder

gadgetmind wrote: »

High-yield = more risk.

Fixed interest = value will fall if/when interest rates rise.

Quite a few high-yield vehicles, including some that don't mention fixed interest and give the impression they are UK equity funds/ITs, have been buying banking prefs to boost their yield. Fair enough, I hold some banking prefs myself, but there is plenty of risk involved.

What's their sharpe ratio?

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