Investment Trusts Trounce Unit Trusts

darkpool

"Recent research by broker Winterflood showed that over 10 years, closed-ended funds outperformed open-ended funds in seven out of eight major sectors (on a share price basis, taking account of ongoing charges but not the cost of purchase), covering both developed and emerging markets and larger and smaller companies. The only sector in which investment trusts underperformed (over the decade to September 2010) was Japan."

An intelligent person makes decisions on the basis of evidence. That's why I think ITs are better than UTs.......

Read more: http://www.ifaonline.co.uk/ifaonline/feature/1928959/investment-trusts-outperform#ixzz1bFT6l1Iy
IFA Online - News, blogs and analysis for IFAs. Visit the website now.

Ilya_Ilyich

Are there ways for the average investor to buy into investment trusts cheaply? Anyone can sign up to Hargreaves and stick say £250pm into UTs/OEICs with no charges outside the fund management fees, but share dealing at that level of investment is often prohibitively expensive. Are there brokers/platforms that offer cheap access to ITs for this kind of customer or are they primarily the domain of those with much more to save or who're looking for one-off investments?

competitionscafe

Ilya_Ilyich wrote: »

Are there ways for the average investor to buy into investment trusts cheaply?

Many of them have regular savings schemes with low costs or there is the Alliance Trust i.nvest
http://www.candidmoney.com/candidreviews/review44.aspx

http://www.whatinvestment.co.uk/funds/1053952/regular-savng-with-investment-trusts.thtml

http://www.guardian.co.uk/money/2008/aug/10/investmentfunds.stockmarkets

http://www.moneywise.co.uk/investing/investment-trusts/consider-investment-trusts-your-childs-finances

http://www.theaic.co.uk/Search-for-an-investment-company/A-Z-lists/Management-groups/?filterBy=Letter|&investment=1&=

You can also buy IT shares through a low cost no frills online broker like X-O.co.uk (you can have them within an ISA at no extra charge but watch out for their exit/transfer fees) http://www.candidmoney.com/candidreviews/review33.aspx

JamesU

Comparison of IT and UT for some sectors in table below.
But suppose important to consider dealing costs/discounts/performance
fees aswell when choosing.

http://www.investorschronicle.co.uk/2011/09/08/funds-and-etfs/the-big-theme/trusts-that-beat-their-mirror-funds-mTuYht3USo3k5a93imrXbI/index.html;jsessionid=217A712096FA29B538F02EA8CACD88B5.mps-apr-03-8109



JamesU

Ark_Welder

darkpool wrote: »

You must admit a lot of ITs trade at a discount to NAV, surely they have to be better than UTs?

Your comment demonstrates a degree of naivety on the subject.

darkpool wrote: »

An intelligent person makes decisions on the basis of evidence.

BLB53

Are there brokers/platforms that offer cheap access to ITs for this kind of customer or are they primarily the domain of those with much more to save or who're looking for one-off investments?

It is not expensive to invest in ITs (or individual shares). I have an a/c with Interactive Investor (www.iii.co.uk) and using their 'portfolio builder' I buy ITs for £1.50 per trade. I am a long term investor so when I buy, I have no intention of selling. I have a plan, I have my strategy of long term buy and hold and I buy mainly shares and ITs with good dividends. All within an ISA of course. Seems to be working so far.
I tend not to look at OEICs as my perception is they are generally more expensive for my type of investing style. Of course, that is probably a personal prejudice and there may be lots of funds out there with TERs of between 0.4 and 0.9% which would achieve the same objective. I suppose when you use one method for many years and find it works well enough, there's probably not a lot of incentive to change to something you are not as familiar with.
Each to their own as the saying goes!

darkpool

Ark_Welder wrote: »

Your comment demonstrates a degree of naivety on the subject.

i thought you found my posts dull.... yet you continue to respond to them.

jimjames

Linton wrote: »

Clearly as a true believer you must sell your well performing managed funds and go for an IT/tracker confident in the knowledge that you will get better returns by doing so.

Actually this raises an interesting question - how many tracker ITs are there?

Two that I am aware of - both from Aberdeen. Edinburgh UK and US

jimjames

Ilya_Ilyich wrote: »

Are there ways for the average investor to buy into investment trusts cheaply?

With some of the IT savings schemes the cost of purchase are only stamp duty - thats it! Others charge dealing fees but invariably in the savings scheme there is no annual charge for holding the shares.

jimjames

saveonarola wrote: »

Fixed asset pool/lower dealing costs

As I understand it, dealing costs are absorbed within the TER of the UT/IT, so that wouldn't explain discrepancy of performance between UTs/ITs with similar TERs. It might explain why some ITs have lower TERs, but again this would explain out-performance, but not consistency of out-performance.

My understanding is that TER doesn't (despite the name TOTAL) include all costs associated with buying and selling shares in a fund hence a fund that trades less will have lower costs all other things being equal.