Buying investment trusts directly

jimjames

kidmugsy wrote: »

Then you can't have looked at the link I provided.

Or the two I quoted.

I'm not aware of any dealing platform that has costs lower than stamp duty only.

kidmugsy

jimjames wrote: »

Or the two I quoted.

I'm not aware of any dealing platform that has costs lower than stamp duty only.

Quite. Mind you, I can see that the advantage of flexibility at a cheap dealer might outweigh the extra cost. I take it that the extra cost would include dividend reinvestment charges, which might be disproportionately heavy.

For many people, I suspect, a bit of inflexibility might be a good thing, discouraging them from fidgeting about with their shares. Every now and then someone writes that he holds fifty shares and that he deals ten times a month. Bloody hell, he must want to get poor.

westy22

kidmugsy wrote: »

The share plans work by adding together all the customers orders and buying in one lump. It would not be too surprising if that led to a little bump up in the price.


Anyway, why do you suspect the managers of malarkey? What do they care about the share price at which you deal?

Yes, but I would expect that price spike to follow the purchase - usually a large purchase gets an advantageous price and the price spikes after.

I don't think that the managers are doing anything particularly underhand, I just think that they monitor the price and then choose to make the bulk purchase when the price seems high. The contract notes from one manager I use always has a different purchase time each month, sometimes early in the morning and sometimes late in the afternoon, but always coinciding with the peak price point.

Of course, as they are the managers of the fund they are not purchasing shares on the open market from a market maker. They are buying from themselves so maybe they 'backdate' the transaction to the peak price point.

Or maybe I'm just cynical

melbury

I hold a number of shares in a few investment trusts in certificated form. I really want to buy into some more, but would like to stick to having a certificate (as they are for the long term).

I can't find a reasonable way of doing this as everything seems to be geared towards holding them in an online account.

Doesn't anybody offer a reasonable deal for buying shares in certificated form anymore?

Glen_Clark

melbury wrote: »

Doesn't anybody offer a reasonable deal for buying shares in certificated form anymore?

You can buy any amount through X-O for £5.95 (VAT free), and then transfer them out in certificated form for £15 (+ 20% VAT) total cost £23.95.

Glen_Clark

kidmugsy wrote: »

Anyway, why do you suspect the managers of malarkey? What do they care about the share price at which you deal?

Investment Trust discount is an embarrassment to their management. When they have a 20% discount to Net Asset Value - £1,000m of assets, but shares only selling for £800million, its effectively saying the management are a liability of £200million. Because the company would be worth £200million more without them. So all these cheap share selling deals are designed to inflate the share price - hence 'free' (subsidised from the fund) to buy, but £10 to sell.

kidmugsy

Glen_Clark wrote: »

Investment Trust discount is an embarrassment to their management. When they have a 20% discount to Net Asset Value - £1,000m of assets, but shares only selling for £800million, its effectively saying the management are a liability of £200million. Because the company would be worth £200million more without them. So all these cheap share selling deals are designed to inflate the share price - hence 'free' (subsidised from the fund) to buy, but £10 to sell.

But then buying at the highest price of the day just amplifies the discount, it doesn't diminish it. The whole suggestion is bonkers.

westy22

kidmugsy wrote: »

But then buying at the highest price of the day just amplifies the discount, it doesn't diminish it.

Not sure that I agree with that. The closer the share price is to the NAV the narrower the discount. Therefore if we assume that the NAV stays the same then selling shares at a higher price reduces the discount.

There are worked examples at http://www.theaic.co.uk/guide-to-investment-companies/choosing-an-investment-company/discounts-and-premiums

jimjames

westy22 wrote: »

Of course, as they are the managers of the fund they are not purchasing shares on the open market from a market maker. They are buying from themselves so maybe they 'backdate' the transaction to the peak price point.

Or maybe I'm just cynical

I'm not sure which trust you are investing in but certainly for Aberdeen they are not buying from themselves and the contract note shows which broker was used for the purchase.

The whole point of an investment trust is that it is quoted on the stock market and the manager doesn't have a supply of units they can sell to investors at will. Obviously they can create new shares if shareholders agree but that isn't normally the situation if the shares are trading at a discount.

db7

Glen_Clark wrote: »

If you want investment trusts (and its not a bad idea) the last place to go for them is Hargreaves Lansdown. X-O, for example, charge half as much to buy them and nothing to hold them - unlike HL who charge 0.45%
If X-O did start charging you can withdraw them as certificates for £15 + Vat wheras HL charge £25.
I know of no Investment Trusts who charge less to trade their shares than X-O Those that do are probably best avoided because they will be subsidising the share trading service from the fund - which all investors will pay for.

I have Invesntment Trusts and individual company shares in a Fund & Share Account with HL. I'm trying to find out from X-O what they charges will be to transfer to them. Will they have to be sold and bought back again? They're saying if it's from ISA to ISA then No. But what if an ISA wrapper isn't involved?