First plunge with Investment trusts

takesyourchances

I have just opened my fund and share account for my separate portfolio from my S&S ISA and SIPP to get it started

To start with I have selected to split as above between the CF Woodford Income fund and City of London IT, this will be my first Investment Trust. I will look at a global IT etc once I get these going to start off.

I understand how monthly payments work etc on HL for funds, but IT's is new to me. For Woodfords fund, I selected income for the dividends and to be held as cash until I decide what to do with them.

I selected City of London IT, it was "City Of London Investment Trust" with no other options beside it, funds for example I can select income and hold the dividend cash on my account until I decide what to do with it, I didn't see any option for the City of London IT. Does the dividend get paid as cash automatically and then I decide from there?

A few more questions if anyone can help for City of London IT, on HL if buying into this IT on a monthly payment it seems to be £1.50 per buy monthly, plus 0.5% stamp duty if I am correct?

So would I select my amount for the monthly amount say for November and add cash to cover the £1.50 and 0.5% stamp duty?

If for example I selected to buy into City of London every few months on the monthly payment is it still £1.50 etc with HL rather than every single month?

Sorry for the many questions, once I get started and underway I will understand it better

Thanks in advance.

TCA

takesyourchances wrote: »

To start with I have selected to split as above between the CF Woodford Income fund and City of London IT, this will be my first Investment Trust. I will look at a global IT etc once I get these going to start off.

If for example I selected to buy into City of London every few months on the monthly payment is it still £1.50 etc with HL rather than every single month?

As an aside, I don't know if you've seen it but the Morningstar x-ray tool is pretty useful for analysing portfolios of different holdings. You'll realise the two investments you picked have more than a few holdings in common, but it's quite interesting to see the overlap. It analyses a few other things too:

http://tools.morningstar.co.uk/uk/xray/editholdings.aspx?LanguageId=en-GB

I don't use HL so can't comment on them specifically, but normally you'd specify an amount to invest in total (i.e.what actually leaves your bank or dealing account) and the dealing costs and stamp duty would be deducted from that. So if you actually wanted £50 worth of fund or trust, you'd need to increase the amount. Hopefully a HL user can verify.

You wouldn't normally get the lower cost for regular monthly purchases if you only bought every other month. You'd need to set up monthly purchases I would think.

Ryan_Futuristics

I prefer Income units over Accumulation on the whole - although there are arguments for both ... I have dividend payments go into my bank, then there's usually a monthly saving going out (so it sort of automates the dividend reinvestments and rebalancing a bit)

And yeah, I think the £1.50 fee just comes out of the investment in the monthly savings (so if I put £100 into Murray Int, it'll buy £98.50 of shares ... Not bad as dealing charges go ... If you use Hargreaves Lansdown the way it wants you to use it, I think it can feel quite cheap sometimes ... I can't recall how does stamp duty off the top of my head ... But there's a minimum cash recommendation it has, and that should cover everything)

And yes, City of London and Woodford's top 10 holdings will be very similar - their performance should match closely ... CTY is a very solid dividend payer (and grower), with the long-term robustness a closed-ended fund can offer, while Woodford's holds some interesting small companies and private equity (that seem to driving performance at the moment - putting it in profit while the sector's down about 3-4%) and will probably make more 'investment guru' calls, which he may get right sometimes and wrong others ... But Woodford's will be effectively free to rebalance (as part of the UK equity income portion of a portfolio) while CTY would be better left alone (to avoid dealing charges)

takesyourchances

TCA wrote: »

As an aside, I don't know if you've seen it but the Morningstar x-ray tool is pretty useful for analysing portfolios of different holdings. You'll realise the two investments you picked have more than a few holdings in common, but it's quite interesting to see the overlap. It analyses a few other things too:

http://tools.morningstar.co.uk/uk/xray/editholdings.aspx?LanguageId=en-GB

I don't use HL so can't comment on them specifically, but normally you'd specify an amount to invest in total (i.e.what actually leaves your bank or dealing account) and the dealing costs and stamp duty would be deducted from that. So if you actually wanted £50 worth of fund or trust, you'd need to increase the amount. Hopefully a HL user can verify.

You wouldn't normally get the lower cost for regular monthly purchases if you only bought every other month. You'd need to set up monthly purchases I would think.

Thanks for the link to the x-ray tool, that is handy and I have saved that link.

Yes I saw that the two UK Income holdings had some of the same companies in the top 10, I quite liked the idea of splitting the UK equity income portion of this new portfolio between these two for the UK section between Woodfords fund and City of London IT. Ryan has put it much better. At first I was only going to open City of London, but had my eye on Woodfords fund as well and liked the idea of dividing the allocation to get both.

I will look to add a global income IT in the coming months and will think about what percentage of this portfolio that should be and maybe an Asian Income. I would want to keep this portfolio quite simple and the UK openings will get me started with it.

Thanks for explaining about the dealing price as well, I would just need to increase my amount slightly to cover that for the IT.

takesyourchances

Ryan_Futuristics wrote: »

I prefer Income units over Accumulation on the whole - although there are arguments for both ... I have dividend payments go into my bank, then there's usually a monthly saving going out (so it sort of automates the dividend reinvestments and rebalancing a bit)

And yeah, I think the £1.50 fee just comes out of the investment in the monthly savings (so if I put £100 into Murray Int, it'll buy £98.50 of shares ... Not bad as dealing charges go ... If you use Hargreaves Lansdown the way it wants you to use it, I think it can feel quite cheap sometimes ... I can't recall how does stamp duty off the top of my head ... But there's a minimum cash recommendation it has, and that should cover everything)

And yes, City of London and Woodford's top 10 holdings will be very similar - their performance should match closely ... CTY is a very solid dividend payer (and grower), with the long-term robustness a closed-ended fund can offer, while Woodford's holds some interesting small companies and private equity (that seem to driving performance at the moment - putting it in profit while the sector's down about 3-4%) and will probably make more 'investment guru' calls, which he may get right sometimes and wrong others ... But Woodford's will be effectively free to rebalance (as part of the UK equity income portion of a portfolio) while CTY would be better left alone (to avoid dealing charges)

Thanks, I understand now that the £1.50 will be taken out of the IT amount I would set, so I will add that on top each time I buy into City of London IT. For the monthly amount, the £1.50 dealing charge does seem very good with HL for IT's.

It would be interesting to see is it always £1.50 if you used the monthly account setting every few months etc. I am guessing it is (hoping) as I may not want to buy every month in a row and skip a month here and there.

I guess things will be come clearer as the amounts are taken and it is actually active. Look forward to seeing how this all goes next month on the next direct debit.

When setting up the fund and share account I set the dividends to go into my HL account, then I can decide after to reinvest or withdraw. I most likely will reinvest until I would build the account up more, but it will be interesting to see the dividends go in and again see how this all works as it happens.

With City of London IT, I still don't understand how the dividends work, do they get paid into my HL account? ,,,,,as I cannot see an option to pick for this, I am guessing that the IT dividends do get paid as cash, would that be correct?

These two will get me underway with this portfolio and I will split them as a core of UK equity income.

Next in the coming months would be a global IT, maybe Murray International. I would need to decide on a portfolio percentage after the UK equity income openings.

Look forward to seeing this take shape

takesyourchances

I had another look on my HL account and seen the income settings on the fund and share account, I am guessing " Held on account" means that all my openings in the fund and share account, including City of London IT dividends will be paid to my account?

Hopefully I got this right now

le_loup

Your understanding is correct. Any dividends will find there way to the account where you can trade, hold or withdraw, as you wish.

Ryan_Futuristics

Wishing you all the best with it

Re: monthly savings

It's totally flexible ... You can set it to put £1,000 in City of London one month, then £25 in half a dozen Asian funds the next ... So there's no incentive to keep it regular, and you can stop and start

It's basically £1.50 share and trust dealing if short-term (day to day) market fluctuations aren't a big concern

My stocks portfolio at the moment looks like this:

40% UK equity Income
20% Global income and growth (Murray International)
13.33% European value
13.33% Asian income and growth
13.33% Emerging value

It's about 70-80 weighted towards dividend payers (which traditionally fare better in rising interest rate environments)

The UK and global parts are what you'd call 'quality' shares - safer, more reliable, big global business, dividend payers, and then I've got 40% in more 'value' territory, which is going to be more volatile but more likely to outperform as a whole and over a longer period (and it brings the average valuations in my portfolio down)

I'd like more in Murray, but it's expensive (up around 8% premium) so it's a bit painful increasing that allocation at the moment ... And I'm waiting for an opportunity to buy the Scottish Mortgage Investment Trust (when the U.S. market's back down to sensible valuations)

Euro, Asia and Emerging just came out as equal when I ran CAPE and P/B and IMA growth forecasts against each other, a million different ways ... I was already high in Asia, so now I'm mostly buying Emerging and Europe (which at least look cheap) ... But I am keeping a fair bit in cash so I can buy when markets really drop (hopefully within a year or two)

Another way I look at it is it's 50% big UK shares, and 50% value hunting (so I'll lower my allocation as regions pick up, and increase it where valuation looks better), with the global part kind of out of the picture (the part that Stout runs for me doing basically the same thing)

takesyourchances

Ryan_Futuristics wrote: »

Wishing you all the best with it

Re: monthly savings

It's totally flexible ... You can set it to put £1,000 in City of London one month, then £25 in half a dozen Asian funds the next ... So there's no incentive to keep it regular, and you can stop and start

It's basically £1.50 share and trust dealing if short-term (day to day) market fluctuations aren't a big concern

My stocks portfolio at the moment looks like this:

40% UK equity Income
20% Global income and growth (Murray International)
13.33% European value
13.33% Asian income and growth
13.33% Emerging value

It's about 70-80 weighted towards dividend payers (which traditionally fare better in rising interest rate environments)

The UK and global parts are what you'd call 'quality' shares - safer, more reliable, big global business, dividend payers, and then I've got 40% in more 'value' territory, which is going to be more volatile but more likely to outperform as a whole and over a longer period (and it brings the average valuations in my portfolio down)

I'd like more in Murray, but it's expensive (up around 8% premium) so it's a bit painful increasing that allocation at the moment ... And I'm waiting for an opportunity to buy the Scottish Mortgage Investment Trust (when the U.S. market's back down to sensible valuations)

Euro, Asia and Emerging just came out as equal when I ran CAPE and P/B and IMA growth forecasts against each other, a million different ways ... I was already high in Asia, so now I'm mostly buying Emerging and Europe (which at least look cheap) ... But I am keeping a fair bit in cash so I can buy when markets really drop (hopefully within a year or two)

Another way I look at it is it's 50% big UK shares, and 50% value hunting (so I'll lower my allocation as regions pick up, and increase it where valuation looks better), with the global part kind of out of the picture (the part that Stout runs for me doing basically the same thing)

Thanks very much

The monthly saving is very good and flexible and the £1.50 trade on City of London IT and other selected IT's on HL is very good for feeding in monthly as well. I understand much better the set up over the last few posts here.

Interesting your portfolio allocations and dividend focus etc, thanks for that all helps to learn. This fund and share portfolio I will focus on dividends and keep it quite simple. I have more growth funds etc in my S&S ISA I am drip feeding as well, small companies, Asia, Emerging Markets and so on. I have been drip feeding these steady.

I was looking at other global IT's but keep coming back to Murray International as it has a reasonable dividend compared to others I have looked at. I see that the premium today listed on HL is around 6%, more towards the 12 month average listed on HL.

I am asking myself should I start to drip feed monthly into Murray International on the £1.50 trades and build it up slowly as I could be waiting for a premium that could take a while to appear and I am buying to hold. Would this seem to be reasonable in monthly amounts to get started?

As far as allocations for the fund and share portfolio, I don't envision too many openings as I want to keep it simple as it is a separate dividend portfolio and I was thinking of 70% split between Woodford Income and City of London IT for UK that I am doing and if starting Murray International for Global 30%.

I have a fair bit of Asia in my ISA, so if adding another in this portfolio maybe go 10% with an Asian Income dividend opening at some point.

Thanks again.

takesyourchances

I have just placed a deal tonight for Woodfords Income fund for my fund and share account portfolio from some cash sitting to get it underway.

City of London IT I have set for next month on HL's regular saver on the 7th so I will get the £1.50 monthly trade and another drip feed into Woodfords fund for the 50/50 split UK income allocation. .

I see the premium rose a bit on Murray International IT, I will need to think over the above post about drip feeding Murray International, but in the meantime I have started the UK part so happy with that