Is it worth it to buy ITs for £50 pm? (Long-term investment)

Eponym

I don't know much about ITs as may be obvious from the below!

I have always understood that, in general terms, ITs are better than funds for people making significant investments, as the dealing charges are proportionally quite high for smaller amounts but if you can afford to invest more, the lower annual charges mean you will come out ahead. (All other things being equal).

I have a S+S ISA with Hargreaves Lansdown into which I invest £50 pm (can't afford more as I'm saving for a house deposit). I have stuck to funds as my understanding is that for such a small amount the dealing charges will make it prohibitively expensive to buy ITs.

However, I am intending to invest for the long term (at least 20 years, more likely 30-40) so would I still be better off using ITs rather than OIECs where possible due to the lower annual charges?

What do you think?

atush

Well I have and do and it has been worth it.

But I use the InvTrust In house savings plan instead of a platform as it is cheaper.

le_loup

Ditto
..................

BLB53

However, I am intending to invest for the long term (at least 20 years, more likely 30-40) so would I still be better off using ITs rather than OIECs where possible due to the lower annual charges?

Until now, ITs have been generally lower for charges however the main reason is that OEICS have added extra charges to cover commission to IFAs. But from next year this will not be allowed under RDR so it should create more of a level playing field between the two.

HL currently charge £11.95 to buy shares and ITs which is obviously not cost effective for small purchases. A better option would be iii who only charge £1.50 with their portfolio builder.

The other option would be to go direct to the IT provider like Aberdeen or Henderson and sign up for their monthly investment plan as there are no purchase costs.

Vortigern

BLB53 wrote: »

The other option would be to go direct to the IT provider like Aberdeen or Henderson and sign up for their monthly investment plan as there are no purchase costs.

No purchase costs except possibly Stamp Duty

Also see Baillie Gifford, or RIT Capital Partners for similar plans

Glen_Clark

I would prefer Invesment Trusts too, since they usually have a large discount to net asset value, the fund managers are a liability that is already priced into the shares.
I would not buy Investment Trust shares at launch, because not only is there no discount to NAV, but there are also set up costs, like all the marketing spam they send out to persuade inexperienced investors to buy in at the beginning.
I understand Foreign & Colonial are the biggest, and although not the best performers have made money for me in the past (but past performance no guide to the future etc)
So am just wondering why they have not been mentioned?

Glen_Clark

PS: One thing that has puzzled me about these Investment Trusts trading at about 30% discount to Net Asset Value.
The managers have to pretend to act in the best interests of the shareholders, rather than in their own interest.
So how can they pretend it is not in the best interests of the shareholders to liquidate the trust?

atush

I invest in F&C and also their PE trust, Graphite enterprise.

jimjames

Glen_Clark wrote: »

PS: One thing that has puzzled me about these Investment Trusts trading at about 30% discount to Net Asset Value.
The managers have to pretend to act in the best interests of the shareholders, rather than in their own interest.
So how can they pretend it is not in the best interests of the shareholders to liquidate the trust?

Isn't allowing shareholders to continue buying £1 for 70p in their best interests?

Despite that the performance over the last 12 months has been well in excess of the FTSE so good for shareholders too. With PE being able to liquidate immediately isn't likely to be easy if possible at all.

Back to the question, yes it is, yes I do and the manager schemes are the cheapest way to do it.

jimjames

atush wrote: »

I invest in F&C and also their PE trust, Graphite enterprise.

So do I. Compared to UT investments or some other manager plans (TEMIT for example) their costs are minuscule.

Glen_Clark

jimjames wrote: »

Isn't allowing shareholders to continue buying £1 for 70p in their best interests?

Thats lke saying its in the best interests of the owners for the managers to run the company badly so someone can buy it cheap.
The shareholders are the ones who own the shares, not those who haven't bought them yet. If the trust was liquidated the shareholders would get nearer £1 for their 70p. So I don't see how it is not in the interest of the shareholders to liquidate the Trust. But I can see how its in the interest of the Trust Managers to keep thinking of excuses to keep the Trust open so they can keep drawing their fees.