Funds, investment trusts and ETFs

RetiredInThailand

ChesterDog wrote: »

I hold no ETFs, as I want to outperform indices.

I have around 30 individual equities (almost all are FT100) for income, and trusts and funds to cover sectors ranging from humdrum to mid-risk.

Last few days aside, my portfolio returns around 20%.

Over the last 12 months (discounting the last few days) the FTSE 250 ETF tracker MIDD has returned 24% in capital plus a few % in dividends.

Including the last few days it has still returned over 20%, including dividends.

Personally I only hold ETF trackers and other exchange traded items as I dont want to pay high management fees on funds.

Past results are not a good guide to the future, of course.

Glen_Clark

El_Selb wrote: »

What are the drawbacks of Investment Trusts compared to funds?

Investment trusts shares don't usually accurately reflect the value of the underlying assets. If investors think the management is good they may trade at a premium - ie more than the underlying assets. Wheras if investors don't think the management are worth their fees the shares may trade at a discount - less than the underlying assets. Variations in the discount/premium can make the shares more volatile than the underlying assets.
As an investor I prefer Investment Trusts. Wheras financial advisers have traditionally preferred funds because funds paid them commission, Investment Trusts don't.
HL's 'Wealth 150' funds were known in the trade as their 'Commission 150'

Drp8713

People generally say small investors shouldnt hold individual shares on here.

I however think you should hold a few at least. Over the last few days, my funds have taken a battering like everyone elses.

However my shares have taken far less of a beating. In fact both of my AIM shares were up yesterday, one over 3%. even though they are only worth a few hundred quid they have both grown enough to break even/ beat the dealing cost within a few months.

Funds will move with the market, shares might not (they could do worse)

Linton

El_Selb wrote: »

What are the drawbacks of Investment Trusts compared to funds?

1) Being shares on the LSE, ITs tend to be more volatile than Unit Trusts/OEICs
2) The previous advantage of Trusts in the form of lower fees is becoming much less significant now with "clean" funds available. I believe some ITs charge more than some similar UTs/OIECs though havent checked this.
3) Much smaller choice of ITs. 407 ITs vs 2511 UTs/OEICs according to Trustnet. ITs tend to be more niche investments. If the niche is what you want then fine.
4) You do need to check on the relative performance. There was an example, may have been Threadneedle EM, where the trust did significantly worse than the corresponding fund.

Rollinghome

Linton wrote: »

2) The previous advantage of Trusts in the form of lower fees is becoming much less significant now with "clean" funds available.

This is often over-stated. With clean funds you'll still need to pay a platform fee of some kind, whereas with ITs you can avoid it altogether. The biggest closing of the cost gap came some years ago when it became possible to buy UTs without paying a 5% or more front load.

On annual management fees, it's a mistake to assume that those of ITs will always be lower than UT/oeics and it's more common for ITs to have performance fees. But you should also be aware that the trading costs due to inflows and outflows that an open-ended fund will have aren't shown in the AMC or even the TER/OCF and are almost impossible to know, as are the costs to performance of providing liquidity. The answer is to assume nothing and do your research.

kidmugsy

ChesterDog wrote: »

Last few days aside, my portfolio returns around 20%.

Woof! Woof!

Last few days aside, Mlle Whatsit is still First Lady of France.

ChesterDog

Okay... I could have expanded it, but didn't want to pull away from the OP's topic. What I could have said is that in spite of the ups and downs -such as the notable down of the last few days - it's generally good for that kind of return.