Troy Income & Growth Investment Trust

melbury

Just wondered if anyone has any views on this.

I am looking for a better return on savings than banks/building societies are offering and saw this recommended in the Saga magazine as being worth looking at.

jimjames

You need to be aware that this is very different to bank savings as your capital is at risk both from the performance of the investments and the change to the discount/premium of the trust share price.

If you've never invested in investment trusts before then it may be worth further analysis so you are aware of what you are buying into and you may be better of sticking to a unit trust which could be less risky.

BLB53

Most ITs from the UK Growth & Income sector will give you a better return than banks/BS. I hold several but not Troy as it does not have a good track record and its charges are too high. The better trusts would be City of London, Temple Bar or Edinburgh imo.

Here's a ling if you want to compare them.

http://www.theaic.co.uk/Search-for-an-investment-company/Geographical-sector-search/Conventional-companies/Company-list/?sector=UGI&structure=0

melbury

BLB53 wrote: »

Most ITs from the UK Growth & Income sector will give you a better return than banks/BS. I hold several but not Troy as it does not have a good track record and its charges are too high. The better trusts would be City of London, Temple Bar or Edinburgh imo.

Here's a ling if you want to compare them.

http://www.theaic.co.uk/Search-for-an-investment-company/Geographical-sector-search/Conventional-companies/Company-list/?sector=UGI&structure=0

Many thanks for the info. Are the charges paid as a separate thing, i.e. do you get billed every so often, or do they take it out of the overall fund? - if that makes sense:o

City of London looks quite a good one to me, but must admit I didn't really understand the payment of charges.

Masomnia

melbury wrote: »

Many thanks for the info. Are the charges paid as a separate thing, i.e. do you get billed every so often, or do they take it out of the overall fund? - if that makes sense:o

City of London looks quite a good one to me, but must admit I didn't really understand the payment of charges.

Management charges are just reflected in the price, so if one fund has a higher management charge, but invests in exactly the same things, then after a year the price will have risen by less (or fallen by more!) than the equivalent with lower charges. You don't get bills or anything like that.

Depending on the fund you may be buying and selling at different prices - the 'spread'.

Totton

I hold Troy (TIGT) and have it paired with Finsbury Growth & Income (FGT). Having held City of London, Edinburgh etc in the past I sold out due to their being on persistent premiums. If I were to go for just one at the moment it would Finsbury on its marginal premium of 0.1 or thereabouts. http://www.frostrow.com/clients/finsbury-growth-and-income-trust-3/

You also need to consider if you want the dividend, if so then Finsbury is 2/5% compared to Troy's 3.7%

HTH,
Mickey

melbury

I am still reading about various trusts, but have to admit that I don't really understand the charges:o Some seem to have a performance fee and others don't.

Also there is such a variation in the share price from Troy to Finsbury and Temple Bar:eek:

Totton

In brief, forget the actual share price.

You don't need to worry about the share price other than the fact that multiplied by the number of shares it gives you the size of the trust (close enough anyway) So Troy at 55p per share just means that for every £1 you hold more shares but not % of the trust. I also hold Personal Assets at £350 a share, it just makes it more expensive to buy into as unlike OEICS you can't buy a fraction, so it is whole number of shares only rather than 200.09654 of OEIC units.

Costs/Fees, I just use the TER as a guide and consider the performance fee separately. For Troy's fees you can see these reducing as the fund size increases, as a 50 mil trust it was natural to see higher fees, Troy have promised to reduce these now that the fund is growing, remember that Troy are relatively new to the IT arena and replaced Glasgow Income Trust just a couple of years ago.

BLB53

Here's a link to an article on Motley Fool which may help?
http://www.fool.co.uk/news/investing/investing-strategy/2010/03/09/the-lazy-investors-guide-to-growing-income.aspx

Limit_and_beyond

Hi. Melbury and others on this thread, I hope you don't mind me joining. I wish to invest half my ISA allowance (the other half is in cash) into something like this, I have been following the forum for a few weeks now, and I am interested in something similar to this. I followed Melbury's link and from that list of funds I liked the look of City of London. To buy this as an isa, the page linked me to Henderson Global Investers, whose charges are £25 annual and £15 to purchase/sell. Are these reasonable charges? They don't appear too excessive. My previous thoughts prior to this strand had been splitting the money between Fidelity Moneybuilder Uk index and a similar fund tracking the American market, buying these in an isa from Cavendish. Would that be a better option? I will not need the money for at least 5 years but want to see it work, in a safe ish environment. Apologies again for joining in on this thread, I hope I haven't broken too many forum rules.

bowlhead99

I don't actually have a lot to add to Totton and BLB but I've cut and paste the below from something I wrote elsewhere (with updated prices for it to make sense). Cheers

melbury wrote: »

I am still reading about various trusts, but have to admit that I don't really understand the charges:o Some seem to have a performance fee and others don't.

With any kind of fund or investment trust there are basic costs that are taken out of the assets of the fund/trust over the year.

1) A management fee charged as a percentage of the assets each month. Might be described as AMC(annual management charge) or simply management fee, expressed as a percentage per year. Straightforward enough.

2) Other costs which might or might not be linked to the amount of assets, such as administration, report printing, financial audit, banking/custody services etc. In fund documents they generally project the TER 'total expense ratio' or 'ongoing charges' percentage, being all costs (including the management fee above) over the average assets of the fund- so you can get a feel for the level of these extra running costs. There's usually a summary in the glossy annual reports and you can always just look in the investment trust's published profit and loss or income statement to see how many pounds they spend on admin compared to how many millions of pounds of assets they have. They don't vary massively between trusts (although some larger trusts will be able to spend proportionately less on admin) - and certainly they don't vary as much as the actual net returns to investors driven by the investment choices, which is what's really important to investors, so don't dwell on it too long.

Then you get performance fees, again taken from fund assets and not billed to you separately, and they're all calculated differently.

Generally - an incentive for the manager to do well, by taking a slice of the profit. Usually to start taking a slice he has to get investors a total return (ie improving the net asset value and paying dividends) that beats a certain hurdle - the hurdle might be a fixed percentage (x% growth) or a variable one (beat the FTSE or some other benchmark).

The share price and the net assets of a trust are not always exactly in line, because of market forces, so if the fee is based on NAV you might find yourself paying a fee when the NAV goes up without the share price giving you the same good growth. But conversely you might have the share price going up from a large discount to NAV to be a premium to NAV, without the NAV actually moving, and so no perf fees get paid even though you made 20%.

The perf fees are often subject to a 'high watermark'. Basic concept is: if the tide comes in really high one year and he takes a fee on growing the net asset value to £1.50, then next year it falls back to £1.25, he won't get another performance fee when it grows from £1.25 to £1.45. Then when it goes up to £1.60 the year after perhaps he only gets the performance on £1.50-£1.60, not £1.45-£1.60. The small print might reset the benchmarks/watermarks every so often.

If you judge a trust or a fund purely based on what they return to you as an investor, fees are almost irrelevant, but of course they do give an indication of how much would be lost to running costs in a year when the basket of underlying investments simply breaks even or worse.

Also there is such a variation in the share price from Troy to Finsbury and Temple Bar:eek:

The actual price doesn't really matter. For my £1000 invested I don't care if it gets me 1000 shares at £1 or 500 shares at £2. If the trust doubles in value after fees I get £2000 back in either case. If the trust pays out dividends of 5%, I get £50, whether this is 5p a share on 1000 shares or 10p a share on 50 shares.

Look at the share price of HSBC and Burberry.
- The market thinks Burberry should cost £12.30 a share based on the assets and profits of the business and the number of shares in issue. The market capitalization of the whole business is £5 billion.
- The HSBC share price is £6.50. Is it really only worth half as much as Burberry? No, the whole market cap is £120 billion!

Knowing the price per share is useful for being able to do quick sums in your head of how it's moved over the last year or five. or what percentage has just been paid out in dividends if 5.2p a share is being paid. But it's meaningless on its own.