pound cost averaging with investment trusts

Surreyboy

Hi,

I have holdings in a few funds and investment trusts. I invest monthly by direct debit. I am aware of the benefits of pound cost averaging (eg buying more when the prices are low etc), but just wondered whether this applies equally to investment trusts as to open ended funds. I wondered whether the premium/discount aspect would have any effect.

I suppose it would average out how much of a discount/premium you were buying at over the years, but you wouldn't necessarily always buy less when it was at a premium etc ?

Thanks!

masonic

I don't think the added complexities of ITs really make much difference at all - there are just more factors that go into determining the price movements of an IT. There may be higher trading charges, which would make regular purchases more expensive than lump sum.

Thrugelmir

Personally I would avoid buying trusts at a premium to NAV. Focus on those at a discount.

Surreyboy

Thanks for the replies. In terms of higher charges, I am with III and regular investing costs only £1.50 each time (the same as for funds). Thanks

bigfreddiel

Well it makes very little difference if you buy each month or just an annual lump sum say.

Dealing costs would be less and monthly investments miss out on valuable dividends, that's where the growth comes from if you reinvest.

If you can afford it do a lump sum investment.

Cheers fj