OEIC v IT

Legacy_user

Hi all,

I currently invest in a few open ended funds as part of my S&S ISA and was going to add some global small cap exposure through Baillie Gifford Global Discovery (all my holdings are large cap focussed).

However I have noticed that there is a very similar IT - Edinburgh Worldwide IT run by the same team and has very similar holdings.

The TER of the OEIC is 0.84% and it looks to be 0.99% for the IT. I would also have to pay a deal fee of around £11 and pay the 0.5% stamp duty to buy the IT. I only plan to put around £2k in. At first glance, the OEIC seems the obvious choice, however the IT is nearly at an 11% discount.

Therefore based on the above, taking into account fees and discount, which seems to be the better proposition? I've never really looked at ITs before (due to trading fees putting me off), I am not therefore sure how important the discount figure is and does the importance vary between different ITs? Looking at the history it usually trades at a discount, although noticed earlier in the year it went to a slight premium.

(Note I don't plan to drip feed it, as know this would rule out the IT due to deal fees).

Totton

A quick chart shows that the Baillie Gifford fund has outperformed the Edinburgh Worldwide IT over 1, 3 & 5 years.

Ryan_Futuristics

Have you seen you can compare their performance if you look at the Global Discovery chart then enter EWI in the Equity box?

It looks like the Global Discovery's done better over 5 years at least - and they seem to target slightly different sectors ... But all things being equal, investment trusts usually produce better returns (simply because of the way they're run) - and things may look different over 10 years (IT investors are usually more experienced with a longer horizon)

The discount could be a blessing or a curse in the medium-term ... With slowing global growth, global small companies might not be a popular investment in coming years (generally funds are switching more into large caps and dividend payers as good defensive stocks) so the discount could go down further

Personally, as global funds go, I'd be more tempted by the Scottish Mortgage Investment Trust, Witan (unpopular with some), and Murray International (if you can stomach the premium) because of their flexibility to rotate between asset classes and sectors

Otherwise, perhaps the OEIC, just because these funds have become much cheaper recently to compete with ITs and trackers again

System

Totton wrote: »

A quick chart shows that the Baillie Gifford fund has outperformed the Edinburgh Worldwide IT over 1, 3 & 5 years.

Thanks. It has indeed, although the mandate and managers of the IT changed in January of this year to move from large to small cap, and the managers are the same for the Global Discovery fund, so I did not really look at past performance of the IT.

System

Ryan_Futuristics wrote: »

Have you seen you can compare their performance if you look at the Global Discovery chart then enter EWI in the Equity box?

It looks like the Global Discovery's done better over 5 years at least - and they seem to target slightly different sectors ... But all things being equal, investment trusts usually produce better returns (simply because of the way they're run) - and things may look different over 10 years (IT investors are usually more experienced with a longer horizon)

The discount could be a blessing or a curse in the medium-term ... With slowing global growth, global small companies might not be a popular investment in coming years (generally funds are switching more into large caps and dividend payers as good defensive stocks) so the discount could go down further

Personally, as global funds go, I'd be more tempted by the Scottish Mortgage Investment Trust, Witan (unpopular with some), and Murray International (if you can stomach the premium) because of their flexibility to rotate between asset classes and sectors

Otherwise, perhaps the OEIC, just because these funds have become much cheaper recently to compete with ITs and trackers again

Thanks Ryan. I have been looking at Scottish Mortgage too since I found out about this IT. Like I said I had never really considered them before but perhaps they need a closer look

System

Looks like trustnet have been checking out this thread;)

http://www.trustnet.com/News/563354/baillie-giffords-high-octane-version-of-scottish-mortgage-trading-on-a-discount/1/1/