An investment trust for growth?

Reaper

bigadaj wrote: »

A quick review of trustnet as linto suggested shows that Lindsell train it has a 0 ndy and has a very good record of high returns, not a recommendation just a suggestion for the op to look at and do some research.

I had a glance at the charts. They have been a bit odd this year. The NAV has risen modestly but the share price has been very volatile, shooting up and down. Not sure what has caused that but I expect if you check the reports they will explain it.

However back in 2012 I was amused to hear the fund manager telling people not to buy it because it was overpriced at the time, which is refreshingly honest:
http://www.thisismoney.co.uk/money/investing/article-2218627/Dont-buy-investment-trust-expensive-warns-Lindsell-Train-manager.html

briley

As OP thanks for all the comments - yes, I do not want income, just growth and yes, I am using my ISA allowance - or will be. I have a low income (enough for my needs) but a high percentage of income from dividends. Never saw the point of a stocks and shares ISA since the dividend was tax free (sort of) and I never generated enough capital gains. With the new tax on dividends all has changed.

I like investment trusts as they can have a very low management charge so that is something I look at early on. What I really want is an investment trust that automatically re-invests dividends they receive and does not pay it to me, something that generates income tax!

Trustnet does not enable one to specify growth - lots of other options but not that one. Incidentally the link is faulty, it is trustnet.co.uk

J P Morgan does give growth trusts, but their charges look a little on the high side, up to 1.6%. However something to look at.

F&C is a fund of funds, they charge around 0.65%, not bad but then you have to pay the management charges on the funds they 'invest' in so not so good.

City of London again stresses, to quote them "recognise the importance of dividend income". Not what I want.

From the comments it is clear almost everyone looks for income - maybe I am going to be disappointed and will have to help the government out a more in the future that I want to.

bowlhead99

stringer_bell wrote: »

The Lindsell train one looked good, It has a 3.4 percent annual charge, I'm not sure whether that good or bad? Thats with HL anyway

You'll see as you research more that a fee of 3% or more is very high for an annual management fee. However, that isn't a fixed recurring fee. Actually, they charge about 0.65% as fixed management fees. But separately, they take a performance fee equivalent to a ten percent share of the investors' NAV or share price returns (whichever higher) with a "high watermark" system so if the price later falls back, you don't get charged again when it goes up again.

So, if HL say that LT they took a 3.4% fee from the trust one year, almost 3% of it reflects them taking a tenth share of the 30% excess profits they must have delivered for you that year. If they have a bad year this year, their fee will just be the normal one, of less than two thirds of a percent, and the same again the year after until they get back to their high point and can start again with the high fees.

Good point made above about it being on a massive premium to the value of it's assets. Some of that reflects the fact that people are just dying to get in at any cost. Which doesn't make it much of a bargain. An element will be because one of the things that the trust owns is some shares in the LT management company itself which some feel well be very successful, undervalued now in the NAV calculation and worth a lot in the future - and you can't buy into that company any other way.

In the most recent factsheet though, as on some previous ones, they urge some caution on the share price compared to NAV. Markets are not a dead cert.

So, it is not one of the simplest ones to understand. Investment trusts can be tricky because what you pay for is not literally what you get, in terms of value of underlying assets. For the LT one, best time to buy would be when the share price is well below NAV and both are well lower than previous highs, ensuring no performance fees would be payable for ages. However, could be a long time waiting for that opportunity ...

le_loup

briley wrote: »

Trustnet does not enable one to specify growth - lots of other options but not that one.

Ah, but it does. Sort on yield - lowest first - and all the zero dividend ITs come up first.

Glen_Clark

briley wrote: »

I like investment trusts as they can have a very low management charge .

Not as low as the 0.07% of an S&P500 ETF - Warren Buffet advised his wife to invest 90% of her inheritance in the Vanguard one, but Black Rock would be slightly cheaper for UK investors because its an accumulation ETF so the Broker won't charge for converting dollar dividends to sterling. The US tax system favours growth over dividends, so US companies tend to spend earnings on share buybacks rather than pay dividends - which is just what you want.:)
Only downside I can see is there is no discount like with some Investment Trusts, and you cant hold the share certificates yourself.

Thrugelmir

briley wrote: »

F&C is a fund of funds, they charge around 0.65%, not bad but then you have to pay the management charges on the funds they 'invest' in so not so good.

The income version of the trust was one of the Investor Chronicles top 100 funds in 2015.

melbury

Linton wrote: »

Go to www.trustnet.com. Select Investment Trusts from the top left pull-down menu. Click "search" - 400ITs are listed. Sort by one of the performance data items and research possible candidates forr consistency, diversification etc. Avoid ones with high premiums and be suspicious of ones with unusually high discounts. Depending on your other investments you may want to look for ITs investing broadly and globally.

If you have more than £5K from dividends why not use S&S ISAs.

Is the link to trustnet working? I end up at a completely different site.

Paulrm71

How about Scottish Mortgage IT? Low yield of just over 1%, and lowish charges of 0.52%.

stringer_bell

Paulrm71 wrote: »

How about Scottish Mortgage IT? Low yield of just over 1%, and lowish charges of 0.52%.

looks decent, on the off topic, I noticed on HL

16:35 - 28/01
Buy 156641 250.50p £392,385.71

Who would buy such an exact amount like that?

Thrugelmir

stringer_bell wrote: »

Who would buy such an exact amount like that?

Someone willing to buy an offload. Probably a placing.