Perpetual Income Acc Fund or Edinburgh Investment Trust?

inflationiscoming

my understanding, based on experience with buying and selling through HL is as follows:
Quoted prices are based on the value of the fund at midday. The price of the fund is based on the value of the underlying shares at midday. The HL website updates overnight, so generally if you look on Monday evening, this is the price at midday on friday. However you can look at the website of the fund management company on Monday evening to see Monday's mid-day price, HL takes a bit more time to update. If you then place a sell order on Monday evening (or any time before Tuesday 8am) then the sale will be executed "at the first possible opportunity" on Tuesday. Sometimes the sale is not executed in the morning, sometimes it takes until Wednesday (this happened when I sold Japan post-tsunami and I am assuming this was due to the level of trades being placed). The sell price is the price at the point the sale is executed, so this may not be any of the mid-day prices quoted. The sell price will reflect the underlying value of the fund at the point the sale is executed.

So yes the volatile market can make things difficult. I think the difficulty is also that while you can sell and but funds like shares on HL, they are not shares and not really designed for short-term trading. The general idea is to build up a pot over the long-term which (hopefully) builds up a high level of return, therefore when you eventually sell the (relatively) small fluctuations don't affect your return too much

moneylover

Inflationiscoming - re selling if I were to buy the fund it would be the longterm so I wouldnt be so bothered about price when selling but I think its when you buy that you notice the fact that you are not completely in control. Am still dithering fund or investment trust - I like the fact that the dividends dont have to be paid out of the fund but can accumulate and I cannot really judge whether the trust is cheaper or not given performance fees can kick in - expect I will be happy either way though. I dont know about a fund purchase being executed as quickly as poslsible I think it says that if you buy before 8am it will be the coming midday price.

Linton

moneylover wrote: »

Inflationiscoming - re selling if I were to buy the fund it would be the longterm so I wouldnt be so bothered about price when selling but I think its when you buy that you notice the fact that you are not completely in control. Am still dithering fund or investment trust - I like the fact that the dividends dont have to be paid out of the fund but can accumulate and I cannot really judge whether the trust is cheaper or not given performance fees can kick in - expect I will be happy either way though. I dont know about a fund purchase being executed as quickly as poslsible I think it says that if you buy before 8am it will be the coming midday price.

Suggest you first decide what area you want your fund or trust to invest in and what you want from in. You are then in a position to assess both funds and trusts to see which specific one best nmatches your needs.

moneylover

Linton wrote: »

Suggest you first decide what area you want your fund or trust to invest in and what you want from in. You are then in a position to assess both funds and trusts to see which specific one best nmatches your needs.

thank you, thats true of course, but it wasnt the point of my starting this thread it was more about whether I bought an IT or a UT in a particular sector and getting to grips with how you actually compare and what all the figures work

competitionscafe

A quote from this article which may be of interest:

"Leading analyst Iain Scouller compared Neil Woodford's Invesco Perpetual Income and High Income funds with Edinburgh Investment Trust and concluded the open-ended funds have a better risk-reward profile."
http://www.iii.co.uk/articles/20306/market-turbulence-can-lead-rewarding-discounts

Totton

moneylover wrote: »

....the point of my starting this thread it was more about whether I bought an IT or a UT in a particular sector and getting to grips with how you actually compare and what all the figures work

Hi,
To help make a decision consider that any costs/charges will reduce your eventual investment. So I would calculate the potential gain or loss at specific average returns of say 4%. To do this just start with £1000, deduct the initial costs of the OEIC and IT and then add 4%, for year 2 simply deduct the TER less any refund (0.25% for the OEIC) and add 4%, repeat steps for however many years. At the end you will have two pots of money, which is the greater :-)

Okay this is simplistic but nevertheless it will demonstrate the effect of charges and may even give you cause to look for a fund that does not pay a performance fee. If you really want to be shocked, do the sums for 10 years and see how much money you are paying to the fund manager. Obviously this is worthwhile if you are getting outperformance but mostly it's not.

I'm in Edinburgh IT, it pays a good dividend and I get Woodford (in a nice way!). However it is on a 3.3% premium at the moment which for me is too much.

It is often suggested that if you are new to investing, stick with OEICS or UT's. If you have some experience then take a look at IT's, next up is direct equities, ETF's etc. My own pleasure is IT's as in the majority of cases I can get a better deal than in a comparative OEIC but in some cases they are the better investment vehicle.

HTH,
Mickey

moneylover

Thank you Mickey, I appreciate the premium is highish but I like Woodford and I dont see the premium dropping much when dividend paying shares are all the rage. I have Vodophone shares but I cannot afford to buy any appreciable sum of any of the other main shares Woodford invests in although they are all ones I like.
I will wait and see what the market does in the next few weeks as the share price may come down if market drops but I don't suppose that will affect the premium.
But if you can suggest an alternative in the same IT sector that is a better bet at the moment I would be pleased to know.
Investors Chronicle often suggests ITs that are on a premium last week they said Murray International was excellent and worths its high premium - its diffiicult for a fairly novice investor like me to make the call!

moneylover

Oh no! Am I still misunderstanding an investment trust?

From what everyone has said in this thread I am now presuming that if I spend £3000 on an investment trust and the shares are £10 I will get 300 shares and when the dividend is announced I will get (say) 10p a share times 300

But then I read this - it was about a completely different IT but its the principle

"For a start, back in 2010, potential investors were complaining about the premium to Net Asset Value that Fidelity China Special Situations shares commanded.
In other words, to get £1 of assets, you had to pay £1.15 or so. No longer: the same £1 of assets can now be purchased for 97 pence."

So does that mean that I dont get 300 shares its reduced by the percentage points that the premium is over zero?

Am now as confused as I was when I first started this on page one!

Ark_Welder

moneylover wrote: »

From what everyone has said in this thread I am now presuming that if I spend £3000 on an investment trust and the shares are £10 I will get 300 shares and when the dividend is announced I will get (say) 10p a share times 300

The premium or discount does not affect the number of shares bought in an investment trust: it is based entirely upon the price of the share at the time of purchase. What the article is saying is that your £3000 might have bought into £3010 NAV's worth of assets, or it could have been £2990's worth. No different to buying ordinary companies where it is also possisble to work out a net asset value per share - although this is something that not many bother to think about.

Totton

moneylover wrote: »

But if you can suggest an alternative in the same IT sector that is a better bet at the moment I would be pleased to know. Investors Chronicle often suggests ITs that are on a premium last week they said Murray International was excellent and worths its high premium - its diffiicult for a fairly novice investor like me to make the call!

Hi moneylover,
You are right that income paying stock is in demand hence the premiums on some of the IT's.

For UK Growth & Income the following table at Trustnet lists that sector and form there you can get an idea of related risk and performance, EDIN is at 78 which puts it at 5 from 22. As I mentioned above, I hold EDIN but I also hold TIGT (Troy Income & Growth) which is 4 from 22 on the risk scale as used by Trustnet (others may vary)

http://www.trustnet.com/Investments/Perf.aspx?univ=T&Pf_Sector=T:UGI&Pf_sortedColumn=RiskScore.Score&Pf_sortedDirection=Asc

Okay, I feel that TIGT is perhaps a little more of a punt than may be perceived with EDIN but rather than getting Woodford you are getting part of the Troy team who are perhaps one of the most sought after managers in the current financial climate. Their OEIC (Troy Trojan) has had to soft-close due to demand! The Troy style is wealth preservation and at about 52p per share you can perhaps also psychologically benefit from being able to hold more shares than you could for many of the others in that sector, I find it a little more mentally satisfying to hold say 800 instead of 100 shares :-) I think Troy have been in charge of this IT for about 12 months now, it was formerly the Glasgow Income IT and was not a good performer under the old management so looking at anything other than 1yr performance is not really much use.

Another good choice in this sector is Finsbury Growth & Income which is run by Nick Train,

My personal preference would be to consider PNL (Personal Assets) but at £340 a share and not in the UK sector you may prefer EDIN or TIGT. These are of course not the only ones worth considering nor necessarily from the best sector, I'm just considering your previous posts when thinking out aloud. If you buy into PNL you can forget about discounts as they operate a mechanism to keep that gap very low and if it started to dirt they purchase their own stock or release stock to meet demand. It's got a low dividend so it may be off your radar.

If you are with Hargreaves Lansdown or another fund supermarket then you may also consider Troy Income or Troy Trojan if you prefer growth over income and want to join the Troy fan club :-)

Re: Murray International, this is definitely a well regarded offering and is getting tipped all over the place, even the usually very doom orientated 'MoneyWeek' suggested it as a buy this week!

Regards,
Mickey