Investments and Returns - Example

atush

racing_blue wrote: »

It's a great post, but how do you choose your investment trust? How do you know you are making a good choice when you do? How would these figures compare to a world stock market ETF?

Eg. Vanguard FTSE All World USD, VWRL, +40.5% since inception on Jun 1st 2012.

£10000 invested then would be worth £14053 now, more if dividends reinvested

How would I choose my trust for income (rather than growth) purposes?

This is the one area in investing where past performance makes a stand as being part of your choice.

Because if income is your goal, not growth, then i'd be looking at good dividend yields, particularly trusts that have not only maintained dividends, but grown them every year over decades. And maintained them during periods of volatility and even crashes.

coastline

george4064 wrote: »

The way I see it, it's not only about fund managers try to/do pick great stocks (positive stock screening) but it's also that they can avoid certain stocks (negative stock screening).

Looking at what's happened over the past 12 months, natural resources/commodities/oil stocks have had a torrid time. The index trackers are stuck with these stocks (look at the ftse 100's heavy weighting to miners), any half decent IT manager would not be holding these commodity stocks.

I'd be interested to see what the performance of FTSE 100 (ex miners and oil companies) would look like.

Ftse 100 equal weighted index..

http://www.ftse.com/Analytics/FactSheets/temp/442a1f4f-f73d-405d-ae6d-71c18555aa6b.pdf

Ftse ETF..

http://www.etfstrategy.co.uk/deutsche-awm-launches-first-equally-weighted-ftse-100-etf-77738/

http://www.hl.co.uk/shares/shares-search-results/d/db-x-trackers-ftse-100-equal-weight-ucits

Thrugelmir

jimjames wrote: »

If more investors want shares in an investment trust then the price will rise to a premium but that still has no impact on the manager of the portfolio.

Additional share capital can be created to satisfy demand. The managers then have to invest this money. There's no guarantee that the new monies invested will have a positive impact on the overall performance of the trust.

grey_gym_sock

homerhotspur wrote: »

This article reminded me of the thing that I find frustrating after investing in a number of accumulation unit -Investment funds. I do like to monitor my investments and thought I would get an annual statemnet showing income re-invested but discovered that , not only did this not happen, but it was pretty impossible to calculate. With Investment funds, the re-invested income does not buy new shares or units but is just reflecetd in the value of each unit which is then subject to the normal ups and downs of the market. Although I opted for funds, I wish there was a similar way to track returns and the effect of re-invested income clearly shown by the additional number of shares in a trust.

you could look up the income, in pence per unit, and multiply by the number of units you hold. this data has to be published, because it affects the tax position of ppl holding accumulation units outside of tax wrappers. however, platforms probably won't bother to pass this information on, unless you really are holding units outside of tax wrappers.

trustnet has figures for dividends, though they don't go back very far - about 2 years, i think.

or look at the fund manager's website - though how easy it is to find these figures will vary a lot depending on the fund manager.

jimjames

Thrugelmir wrote: »

Additional share capital can be created to satisfy demand. The managers then have to invest this money. There's no guarantee that the new monies invested will have a positive impact on the overall performance of the trust.

While that's true it's also an exceptional event that is planned in advance and for a set amount of money that is known about. Not all trusts create additional shares and certainly not every year.

Unit trusts have inflows and outflows on a daily basis that they need to handle for investment or redemptions and with no prior knowledge of amounts. Investment trusts don't have that issue.

JohnRo

grey_gym_sock wrote: »

you could look up the income, in pence per unit, and multiply by the number of units you hold. this data has to be published, because it affects the tax position of ppl holding accumulation units outside of tax wrappers. however, platforms probably won't bother to pass this information on, unless you really are holding units outside of tax wrappers.

CSD include the retention of income amount for related ACC units held within their stock movement report page. Still requires a cross reference to the actual number of units held in the account on the retention date but it saves a lot of time scratching around for the income info.

Thrugelmir

jimjames wrote: »

While that's true it's also an exceptional event that is planned in advance and for a set amount of money that is known about. Not all trusts create additional shares and certainly not every year.

Many trusts empower themselves with the mechanism. In the same way they have the ability to repurchase stock. Just a way of ensuring that premiums and discounts can be controlled. The issusance of shares is normally done in terms as a % of issued share capital not value. Value is determined by the market price at the time of issusance. So unquantifiable ahead of the event.

JohnRo

In the case of the trusts I hold I'm constantly being reminded via trustnet's fundswire alert service that they're issuing new equity.

One example is EAT - European Assets Trust

As shown, at times it's issuing equity daily. I've always assumed these alerts are just related to price control mechanisms.

homerhotspur

JohnRo wrote: »

CSD include the retention of income amount for related ACC units held within their stock movement report page. Still requires a cross reference to the actual number of units held in the account on the retention date but it saves a lot of time scratching around for the income info.

Sorry but what is CSD?

JohnRo

homerhotspur wrote: »

Sorry but what is CSD?

Charles Stanley Direct