155000 to invest

dunstonh

doubleJackD wrote: »

to be fair it wasn't me that described ITs being riskier as "factual". I do think when someone describes something as "factual" they should have some strong evidence to back it up.

I congratulate Jem on finding some evidence (though perhaps not the best)

Evidence is there. Check google. Check every generic description of the pros and cons of ITs. It isnt rocket science. You shouldnt need a website to tell you that ITs are higher risk than the equivalent unit trust as their very nature should tell you that for itself. Anyone who thinks gearing or pricing by supply/demand doesnt introduce higher risk really should not be investing in them.

doubleJackD

dunstonh wrote: »

Evidence is there. Check google. Check every generic description of the pros and cons of ITs. It isnt rocket science. You shouldnt need a website to tell you that ITs are higher risk than the equivalent unit trust as their very nature should tell you that for itself. Anyone who thinks gearing or pricing by supply/demand doesnt introduce higher risk really should not be investing in them.

why don't you show your command of the investment world by posting a link that shows "factual" proof that every single IT is higher risk than every single UT.....

It seems to be that people are mistaking personal opinion for facts.

dunstonh

why don't you show your command of the investment world by posting a link that shows "factual" proof that every single IT is higher risk than every single UT.....

It seems to be that people are mistaking personal opinion for facts.

It seems from your post and earlier posts that you don't want to discuss and learn but instead play silly games and make things up. I have better things to do with my time than indulge your silly twisting of words.

doubleJackD

dunstonh wrote: »

It seems from your post and earlier posts that you don't want to discuss and learn but instead play silly games and make things up. I have better things to do with my time than indulge your silly twisting of words.

I apologise for expecting a financial professional to have evidence for claims he has made.

dunstonh

doubleJackD wrote: »

I apologise for expecting a financial professional to have evidence for claims he has made.

How about you apologising for requesting evidence of things that have not been said?

doubleJackD

dunstonh wrote: »

How about you apologising for requesting evidence of things that have not been said?

ehhhhmmmm, you have me confused. What evidence have I requested for things not been said?

jamesd

doubleJackD wrote: »

I only recently found out UTs could borrow as well.....

How can that be possible, a quality broadsheet says that unit trusts aren't allowed to borrow:

"Investment trust managers have another weapon in their armoury that unit trust managers don't have – the ability to borrow money to buy shares"

doubleJackD wrote: »

http://www.telegraph.co.uk/finance/personalfinance/investing/8767542/Citys-best-kept-secrets-beat-unit-trusts-hands-down.html

The same quality broadsheet also says that :

"If a manager makes the right decision, your returns receive a boost. But get it wrong and the losses are accentuated."

And of course volatility, bigger moves up and down, is one of the more common definitions for investment risk. As a more reputable broadsheet mentions when covering the same story:

“When markets are going up, then an investment that’s low-cost and geared will tend to do better than one that isn’t,” explains Mick Gilligan, analyst at broker Killik & Co. Conversely, though, gearing can amplify losses if markets fall, increasing investment trusts’ volatility."

So that's progress, both the quality broadsheet you liked and another are in agreement that investments trusts can have higher volatility, risk.

Now, gadgetmind hinted at an interesting point, survivorship bias, so lets continue with what that same broadsheet has to say on it in the same story:

"Survival of the fittest is stronger in the investment trust sector,” he says. “The open-ended fund universe is much bigger and it’s easier for mediocre funds to hide there. But market forces will deal with an investment trust that’s maintained a wide discount [in its price, relative to its NAV] . . . by closing down or changing the management.”

OK, got it, there's greater survivorship bias in investment trusts than in unit trusts, so the results of a longer term study will have an inherent bias in favour of the IT. Now, what about those higher charges for unit trusts?

"As investment trusts do not offer commission to financial advisers, they generally charge investors less. On average, their annual fees are 63 basis points lower than those on comparable open-ended funds. A ban on commission from 2013, as part of the Financial Service’s Authority’s Retail Distribution Review (RDR), should therefore level the playing field"

Ah, OK, ITs have 0.63% lower charges than UTs because the UTs bundle in 0.5% for the adviser and 0.25% to 0.3% for the platform and get free dealing paid for out of that, often. Hold on, doesn't that mean that the UT itself is actually getting 0.75% to 0.8% less of the money and is actually 0.75 to 0.8% minus 0.63% cheaper than the UT once you pay the adviser out of pocket (and outside the tax wrapper, if any) the same 0.5% and the platform the same 0.235% to 0.3% to hold the UT there, and a bit more for dealing costs? Come to think of it, maybe the reason ITs are "cheaper" is just sleight of hand because you pay extra charges that they don't include, but that the UTs do include. OK, all's now clear on charging as well. How about that extra performance again?

Well, there's something called the efficient market theory that in part says that higher risk investments can be expected to deliver higher returns.

So in summary from those reputable broadsheets and often accepted financial theory of risk and reward:

• ITs have higher total costs once you pay for the things that are bundled into UT pricing.
• ITs have can have higher volatility, risk, than UTs because of their gearing.
• ITs performance in studies is more greatly affected by survivorship bias than UT performance.
• Its' performance is in part higher because they take more risk, as expected for higher risk investments.

And with that all seems to be clear in the world with nice reliable broadsheet sources supporting nicely the points that were made. Not your points, but that's OK, you trust the broadsheets, don't you?

doubleJackD

jamesd wrote: »

How can that be possible, a quality broadsheet says that unit trusts aren't allowed to borrow:

i didn't know before today that UTs could borrow... perhaps in future you could recuce the length of your posts?

jamesd

I'm glad that you have learned something about what can and can't be done. You'll find if you research it a bit more that UTs do not typically use leverage, even though they can, but that ITs typically do, and more than the 10% you mentioned earlier. But it's better for you to do the reading to discover that, you'll probably learn more along the way.

You might have missed part of my point in there, though: I was quoting the same broadsheet story you used as a reliable source and in doing so showing that it had a mistake that you already knew about, illustrating that some care with sources is needed and not all you read from them is always reliable. I've generally fund the Telegraph Sunday editions to have a fairly high error rate compared to the other publications that I read, so a fair bit of care is prudent with their stories. This doesn't mean they are always wrong, just a bit more likely to be than some others.

Sometimes I write short posts, sometimes long. Depends how much material seems to be worth covering. There's been a fair bit here trying to make clear how and why ITs and UTs differ and how those differences can be exploited to make more or lose less money.

If you have the time and money I recommend that you read the Saturday FT for a while. It has a lot of useful material to learn from.

doubleJackD

jamesd wrote: »

So in summary from those reputable broadsheets and often accepted financial theory of risk and reward:

• ITs have higher total costs once you pay for the things that are bundled into UT pricing.
• ITs have can have higher volatility, risk, than UTs because of their gearing.
• ITs performance in studies is more greatly affected by survivorship bias than UT performance.
• Its' performance is in part higher because they take more risk, as expected for higher risk investments.

And with that all seems to be clear in the world with nice reliable broadsheet sources supporting nicely the points that were made. Not your points, but that's OK, you trust the broadsheets, don't you?

i've read this a couple of times and I just can't decide what points you are making.

perhaps you could provide a link that shows that ITs have higher costs than UTs and that there is more survivorship bias in ITs? It would be good if you provided link to some strong evidence, ie not just say go and google it.

Are you not the poster that was telling everyone to invest in Arch Cru?