Investment Trusts Trounce Unit Trusts

darkpool

Linton wrote: »

Some rather more significant reasons....

There are far more UTs than ITs, about 6 times looking at Trustnet, with a correspondingly wider choice of investment and investing style.

Many ITs are small and obscure and so havent been advertised whereas many UTs are managed by the major fund managers who can afford to advertise and put out glossy leaflets and mailshots.

UTs can sell as many units as they can persuade people to buy and the funds invested expand directly from the money paid in. Conversely ITs consist of a fixed number of shares and so if they are successful and popular the share price increases eventually to rise above the NAV, which discourages buyers. So the sales of ITs are self-limiting. The money spent on buying an IT doesnt normally go into increasing the funds available for investment - it goes to the seller.

So the UT mechanism is much more flexible with respect to changes in demand. ITs couldnt cope with the numbers of people currently investing in UTs.

I am sure others can come up with further factors; this is my list from a few minutes thought.

but the fact remains that ITs outperform UTs....... why should people decide to invest in an inferior product? I think some people know it's because IFAs get trail commission for selling UTs to punters. ITs are really for more sophisticated investors who are a bit more streetwise.

Ark_Welder

darkpool wrote: »

but the fact remains that ITs outperform UTs

Not always. 5-year total return figures:

Trojan O - 55%
Personal Assets - 43%

Linton

darkpool wrote: »

but the fact remains that ITs outperform UTs....... why should people decide to invest in an inferior product? I think some people know it's because IFAs get trail commission for selling UTs to punters. ITs are really for more sophisticated investors who are a bit more streetwise.

ITs outperform UTs? What - all of them?

Do most investors get their UTs from IFAs? Investors who post on these boards choose their own investments from their online accounts.

At the moment ITs are a niche market that may well be worth buying for some investments. But they dont meet all needs. Also as a niche market they work well because they are small and self limiting.



To take an analogy, not too good but the best I could come up with quickly ... you could say that everyone should shop at their local grocers rather than a supermarket because the service is better. But firstly many people dont have a local grocers ,secondly local grocers dont sell everything people want and thirdly if everyone did shop at their local grocers the service wouldnt be better.

Experienced investors know that its the sector that counts, not the investment vehicle. What you are arguing about is what colour a new car should be as the evidence shows that red cars have less accidents without having decided whether its a family saloon, an electric town car,or a Ferrari.

darkpool

Linton wrote: »

ITs outperform UTs? What - all of them?

Do most investors get their UTs from IFAs? Investors who post on these boards choose their own investments from their online accounts.

At the moment ITs are a niche market that may well be worth buying for some investments. But they dont meet all needs. Also as a niche market they work well because they are small and self limiting.

not every IT will outperform every UT. tbh i thought every poster here would know we were talking about average ITs against average UTs.

So how many IFAs recomend ITs? UTs advertise a lot, perhaps the only research a lot of UT investors do is look at marketing spiel...

ITs a niche market? you really think that?

Ark_Welder

darkpool wrote: »

but the fact remains that ITs outperform UTs.......

darkpool wrote: »

not every IT will outperform every UT. tbh i thought every poster here would know we were talking about average ITs against average UTs.

Perhaps it's only 1.9% of average ITs that outperform average UTs.

darkpool

Ark_Welder wrote: »

Perhaps it's only 1.9% of average ITs that outperform average UTs.

sorry, i'm not sure what point you're trying to make?

the evidence presented by the OP shows ITs perform better than UTs. do you dispute that?

Ark_Welder

darkpool wrote: »

sorry, i'm not sure what point you're trying to make?

the evidence presented by the OP shows ITs perform better than UTs. do you dispute that?

The point is that I get bored by the same old story in your posts. You don't bring anything new to any debate. Perhaps if you had something genuine to add then there might be a more interest.

competitionscafe

Ark_Welder wrote: »

Not always. 5-year total return figures:

Trojan O - 55%
Personal Assets - 43%

But Sebastian Lyon has only been managing Personal Assets IT since March 2009. If you compare them over the time when he was managing both, the IT has slightly outperformed:

Discrete calendar year performance:
18/10/09 -18/10/10 | 18/10/10 -18/10/11
Trojan Acc 15.68% | 8.69%
Personal Assets 17.15% | 10.17%

Cumulative performance
Investment | 3 months | 6 months | 1 year
Trojan Acc 1.78% 5.84% 8.69%
Personal Assets 2.57% 6.98% 10.17%

However if you look at this page on the F&C website, the average equity OEIC has outperformed the average equity investment trust over 5 years while the reverse is true over 18 years (figs to 31.01.11) - not sure why they chose those timespans only but it would also be interesting to see the results over a wider range of time periods.


From: http://www.fandc.com/new/it/Default.aspx?id=78363

Ark_Welder

competitionscafe wrote: »

But Sebastian Lyon has only been managing Personal Assets IT since March 2009. If you compare them over the time when he was managing both, the IT has slightly outperformed:

Discrete calendar year performance:
18/10/09 -18/10/10 | 18/10/10 -18/10/11
Trojan Acc 15.68% | 8.69%
Personal Assets 17.15% | 10.17%

Cumulative performance
Investment | 3 months | 6 months | 1 year
Trojan Acc 1.78% 5.84% 8.69%
Personal Assets 2.57% 6.98% 10.17%

Thank you!!!

Good to see that there is someone else that researches their investments. I hold both: different platforms, different costs

Ark_Welder

competitionscafe wrote: »

However if you look at this page on the F&C website, the average equity OEIC has outperformed the average equity investment trust over 5 years while the reverse is true over 18 years (figs to 31.01.11) - not sure why they chose those timespans only but it would also be interesting to see the results over a wider range of time periods.


From: http://www.fandc.com/new/it/Default.aspx?id=78363

Offer to offer comparisons used to be frowned upon because it excludes the initial charge on OEICs and the spread on shares. But because the OEIC charge can usually be rebated so perhaps it is less of an objection now.

Hard to say why the open-ended funds might have given a better return than the closed-end funds over 5 years. Was tempted to say a gearing effect during the falls of 2008/9, but then the opposite ought to have occured since then - assuming that it was still in place. The joy of statistics...


As ever, an individual invests their money where and how they see best. Myself, I use both closed end and open ended funds depending upon the asset class, the platform provider and the fund manager. Rather this than excluding particular fund managers or assets simply because one or the other isn't available in one particular form.