ISA Full - choosing an Investment Trust!?

DoctorW

mugsy,

Thanks for the pointer to PAT, looks worthy of consideration although with my timeline of 25+ years they are probably of lower risk than my appetite at the moment. May well keep a tab on them for the future however as I do like their setup.

atush - have only just (after some struggle) set up my SIPP through my business and now am juggling different ideas for what to go into with it...may need to start a new thread for more advice on this! At the moment considering keeping it simple/passive (& high risk) and going into both the VLS 100 (doubling up on exposure to that in my ISA) and an SC index, possibly the Global Small Cap offered by Vanguard. Who knows though, need to do a lot more reading first!

Thanks

Totton

For those who are already investing in them, can anyone give me a little run-through of how they arrived at the decision for a particular Investment Trust? How did you weigh them up, how do they complement your existing portfolio etc.

I like the John Baron way of holding IT's, split things into pots of UK, International and Themes. http://www.johnbaronportfolios.co.uk

If it helps here are my current choices. I use Hargreaves Lansdown as using IT's costs me just £45 for an ISA whilst the Fund & Share a/c is free. The holdings are spread across 2 accounts with each portfolio holding most of the same in a collection of 10 IT's. As you will see, I am a fan of Frostrow (http://www.frostrow.com/#clients)

UK Holdings
I wanted roughly 30% in the UK with a spread across the spectrum as I was happy to take on the risk of smaller co.'s. Finsbury & Lowland are there as my core UK holdings alongside JPMorgan Mid Cap and Henderson Smaller Co's, I have added Aberforth and Schroder in the last 12 months rather than increase JMF and HSL.

FGT - Finsbury Growth Trust
LWI - Lowland
JMF - JPMorgan Mid Cap
SCP - Schroder Mid Cap
HSL - Henderson Smaller Co's
ASL - Aberforth Smaller Co's

Global
Aiming for 50% in this area with an emphasis on family orientated trusts as I like their history and tendency to offer some protection rather than going for outright glory. I have recently added Brunner due to its discount and improving performance at a time when I was looking to cut Caledonia due to its large gain following some sales etc. Caledonia's portfolio worries me a little so I thought why not move it down from 15% to 5% and add Brunner. I also increased my weighting to RIT which now stands at around 20% although I intend to cut it back to to 10%-15% soon.

Law Debenture is a great holding, we've had it for years and are not disappointed with it.
Pacific Assets has also been a great holding and is my favoured Asia Pacific holding. I like First States involvement as I used to hold First State OEICs which did very well and exhibited an element of caution.

Witan was added last year and has been doing well of late. I am wary of it as a multi manager holding but those additional charges are not holding back at present.

Personal Assets Trust was bought very recently, I sold out of it about 2 years ago but the investment risk has increased substantially (imho), the problems of the Middle East and Ukraine are very serious so I decided to move back into PNL rather than go for the guaranteed loss of holding cash on deposit. I also moved a bit into Premium Bonds which I am not a huge fan off but I may win a prize (or not!).

BUT - Brunner
CLDN - Caledonia
RCP - RIT Capital Partners
LWDB - Law Debenture
WTAN - Witan
PAC - Pacific Assets Trust
PNL - Personal Assets Trust

Theme - Biotech & Healthcare
I aim for 20% in Specialist funds but have cut that back recently and have added some of this to Personal Assets Trust.

I chose these as I think Biotech and Health have a long term future. Growth has been phenomenal with a recent dip to shake the trees I guess. I remain happy to hold these for the moment but perhaps they are due another pull back soon.

BIOG - Biotech Growth Trust
IBT - International Biotechnology Trust
WWH - Worldwide Healthcare Trust

Rollinghome

Totton wrote: »

Finsbury & Lowland are there as my core UK holdings

Both interesting. As a holder of Lowland, do you follow it and know what's caused the premium to collapse? Looks like it was trading at a premium of 10% 18 months or so ago but that's all gone so it's now at a discount and still heading south.

It's NAV performance has be around mid table over the year for the sector but the collapse of the premium puts it close to the bottom on share price - down 10% since March, most of that due to the collapse of the premium. NAV has been a fair bit better better than Finsbury but that's stayed on a small premium - have they been buying in their stock? Why has Lowland apparently fallen out of favour?

kidmugsy

If I wanted a diversified investment in large companies in developed markets, I think I'd use a tracker. For small companies, and less developed markets, ITs would attract me.

Perhaps I'd also go for also cautious ITs as a substitute for bonds, which seem very pricey at the moment, such a Personal Assets Trust and Ruffer Investment Company.

I suspect I could save on charges by attempting to mimic the portfolios of those two myself; on the other hand my widow-to-be would like things to be simple to tidy up, and those two companies would fit the bill.

TCA

Rollinghome wrote: »

As a holder of Lowland, do you follow it and know what's caused the premium to collapse? Looks like it was trading at a premium of 10% 18 months or so ago but that's all gone so it's now at a discount and still heading south.

It's NAV performance has be around mid table over the year for the sector but the collapse of the premium puts it close to the bottom on share price - down 10% since March, most of that due to the collapse of the premium. NAV has been a fair bit better better than Finsbury but that's stayed on a small premium - have they been buying in their stock? Why has Lowland apparently fallen out of favour?

Rollinghome, did you get an answer to your Lowland queries?

JohnRo

Rollinghome wrote: »

As a holder of Lowland, do you follow it and know what's caused the premium to collapse? Looks like it was trading at a premium of 10% 18 months or so ago but that's all gone so it's now at a discount and still heading south.

I've put the fall in Lowlands share price down to nothing more than the general retreat from smaller companies over the last few months, I don't think there is anything specific to the trust itself that's caused the fall. Nothing is happening at Lowland that isn't happening elsewhere in terms of NAV price is it?

The Lowland premium very briefly peaked at 7% but has been in low single digits for a long time, so claiming a 10% premium has evaporated is not a true reflection.

The Mercantile has had a very similar slide in recent months reflected in their performance profile over the same period and I've assumed the same cause and effect there.

Since February this year most UK smaller company oriented investments seem to have been sinking, while large caps have generally advanced, a good time to top up on smaller cos perhaps.

A lot of what made smaller companies attractive over a year ago was imo the perceived boost they were expected to get in the much trumpeted recovery at the back end of a long triple dip recession.

What we are seeing now is anything but a broad based recovery, a concentrated asymmetric recovery of sorts led by the central banking politburo meddling in markets on an unprecedented scale. So those perceived benefits and expectations have perhaps evaporated somewhat.

I still think smaller companies are a good bet long term.

Totton

@Rollinghome
Apologies for the late response, I hand't seen your follow-up. I took the downturns to be a response to a few things that include the manager himself saying he preferred his fund whilst the IT was at such a large premium, the market also fell out of favour with mid & small caps. The JMF fund also got hit hard as did HSL and ASL along with Biotech and Healthcare. Of the lot I think Biotech has shown the best recovery.

Thrugelmir

Buy a copy of this weeks Investors Chronicle as they are covering their Top 100 Actively Managed Funds. At least some food for thought and funds to track.

Rollinghome

JohnRo wrote: »

The Lowland premium very briefly peaked at 7% but has been in low single digits for a long time, so claiming a 10% premium has evaporated is not a true reflection.

It's not a share I follow but Trustnet's chart shows the premium peaking just short of 10%, certainly above 7%, and the AIC now show the discount as being -2.4%. Where did you find your figure of peaking at 7%? Until about 18 months ago, when it went to a premium, it was at a discount pretty much throughout back to 2009.



The fall of just under 10% in recent months seems entirely due to the collapse of the premium with the NAV being broadly unchanged. It's managed by Hendersons and looks like a mirror fund of their OEIC Henderson UK Equity Income & Growth with similar holdings. The largest holding are in the likes of Shell, BP, Glaxo etc so I wouldn't view it as a small companies IT even if a proportion of smaller companies have been used to boost returns.

The OEIC version has lost just 1% over the same 6 month period, probably in line with the ITs NAV.

My guess is its more a case of the recent rush of interest by people who hadn't bought ITs before buying solely on the basis of the then rising share price without considering the main reason for the rise was because people like themselves were paying an inflated premium not justified by the underlying performance. The sharper traders would have noticed and magnified the effect. The price is now tumbling as they get out despite the steady NAV.

As ITs have suddenly become more fashionable there seems a lot more volatility in discounts/premiums I suspect because people are seeing them as if they're UTs without really researching what a fair discount should be or understanding what they're buying. Many won't even bother to more than glance at the company's reports.

Nick Train, who runs the Finsbury G&I IT, not long ago warned buyers against buying his Linsell Train IT when the premium went to a dotty 21%. See here... The premium then tumbled to close 2% at one point and the share price went with it despite the decent underlying performance. Seemed to show that buyers had no real idea of what the premium ought to be and were more relying on the 'greater fool' principle.

We'll probably see a lot more of it until we have correction to remind people what happens to premiums when that happens. Recommendations for ITs are problematic because, like any other share, so much can depend on the price you pay.

JohnRo

These are the sources I've used to reference the discount.

[URL="http://tools.morningstar.co.uk/uk/cefreport/default.aspx?tab=7&SecurityToken=E0GBR009GD]2]0]FCGBR$$ALL&Id=E0GBR009GD&ClientFund=0&CurrencyId=GBP"]http://tools.morningstar.co.uk/uk/cefreport/default.aspx?tab=7&SecurityToken=E0GBR009GD]2]0]FCGBR$$ALL&Id=E0GBR009GD&ClientFund=0&CurrencyId=GBP[/URL]

http://webfund6.financialexpress.net/ClientsV21/OriginalDocumentation/Document.aspx?isincode=GB0005368062&DocumentCountries=GB&documentlanguages=1&documentTypes=FS&level=unit&clientid=AIC&securityToken=4xT2b86xqM1l9jzZXze46A==&h=253&w=166

I hold the trust and haven't seen a 10% premium listed for this trust though I confess I don't really check that attribute unless buying, as it is largely immaterial to me at this stage as a LTBH investor.