Investment Trusts

bigadaj

StellaN wrote: »

I just wander if it's priced quite high at the moment because so many people are investing in SMT? I'm just struggling to find an alternative global IT that compliments Fundsmith as much so in the end I may end up investing in SMT.

It's not that high really, there are many trusts that have far higher premiums, but it's had a good reason and invests in a sector that has good potential for future growth.

It's soemthing I'm considering currently, not a definite but a strong possible.

TCA

StellaN wrote: »

I just wander if it's priced quite high at the moment because so many people are investing in SMT?

A large proportion of recent rises will be down to weak sterling. SMT holds very little UK equities from what I remember.

talexuser

TCA wrote: »

A large proportion of recent rises will be down to weak sterling. SMT holds very little UK equities from what I remember.

Exactly, all my global funds have gone up between 15 and 35% in a year and it is not easy to accurately sweep out the devaluation from the underlying performance.

bigadaj

talexuser wrote: »

Exactly, all my global funds have gone up between 15 and 35% in a year and it is not easy to accurately sweep out the devaluation from the underlying performance.

When I've checked in the last few weeks then my global portfolio is up just under 30% over a year and the devaluation of the pound seems to account for about half of that.

StellaN

bigadaj wrote: »

When I've checked in the last few weeks then my global portfolio is up just under 30% over a year and the devaluation of the pound seems to account for about half of that.

So that would indicate that global funds especially those with a high US percentage in their holdings have most probably peaked? So not sure if it's the right time to invest in SMT.

In the same way is it not a bad time to invest in a US index fund with the Dow being at an all time high?

bigadaj

StellaN wrote: »

So that would indicate that global funds especially those with a high US percentage in their holdings have most probably peaked? So not sure if it's the right time to invest in SMT.

In the same way is it not a bad time to invest in a US index fund with the Dow being at an all time high?

The expert answer is who knows.

It is high but markets are often at or near peaks, it's the nature of the investment. It may well be the case that the pound strengthens against the dollar, and euro and other currencies, which would reduce return or even lead to losses to British investors, but again it's a braver man than I that predict currency movements, well or those who are playing with other people's money and have the ability to buy bollinger for their mates when they set the price.

One of the main things that has driven equities, in the uk and worldwide, is the lack of other options. Base rates and associated savings rates are near zero, bond prices often have negative returns or the prospect of capital loss, property prices look extended in many areas.

So the main areas you can get returns are either equities or potentially p2p lending, both with risk to capital.

Whether things get easier or tougher once inflation starts to build, as looks likely on the near future, remains to be seen, but an increase in inflation level again means a flight to equities for protection.

endurance

I have not been an active investor since the mid 90's. All cash was used for bringing up a family, houses, businesses etc. However in 94/95 I left some £ in Fidelity Special Values IT which is still there with all dividends reinvested etc and it has done pretty well. I am now looking for home for £2k per month for next 13 years which will form a chunk of my retirement fund ( not that I will ever retire) The aim aim is capital growth and I am comfortable with higher risk.

IT suggestions? Looking to spread risk across 2 or 3 IT

JohnRo

A few to consider.

ELTA, PCT, SMT, WWH

Rollinghome

endurance wrote: »

IT suggestions? Looking to spread risk across 2 or 3 IT

Bear in mind that IT's are companies and, unlike UTs/OEICs, their shares can sell at a discount or a premium to the underlying net asset value. Where an IT is selling at a high premium to NAV it usually means it's highly rated by buyers for whatever reason. They're voting with their money. They aren't like UTs/OEICs which are bought and sold at roughly par regardless of whether they're very successful funds or complete dogs.

So if you want to know which are the most popular or highly rated ITs, they are likely to be the ones selling at the highest premium - but buying them just because they're expensive wouldn't make much sense. What you need is to find are ITs that suit your investment objective or perhaps are cheap because they are being under-rated - which is not too easy to do unless you know something that other experienced investors don't.

The exceptions on discounts are ITs where the managers have a policy to manager the premium/discount. Well known examples are Finbury (FGT) a UK equity income IT, Foreign & Colonial (FRCL) a global IT, Personal Assets (PNL) a lower risk IT run by Sebastian Lyons, etc. These will be managed to either keep them at par or within a narrow range.

You can get recommendations on Investors Chronicle http://www.investorschronicle.co.uk/funds-and-etfs/top-100-funds/, Trustnet, Morningstar, etc. though arguably their opinion is little better than anyone else's and with IT's it's likely to already be in the price set by the market.

The better approach is to decide what you want to achieve then choose the investments to do it. Bear in mind too that a lot of the return on ITs in recent years has been due to the closing of discounts so don't assume they'll definitely continue to do as well relative to funds as they have done - there's a limit to how much discounts can close. Taking higher risks can give better returns but might not. That's why it's called risk.

StellaN

Rollinghome wrote: »

Bear in mind that IT's are companies and, unlike UTs/OEICs, their shares can sell at a discount or a premium to the underlying net asset value. Where an IT is selling at a high premium to NAV it usually means it's highly rated by buyers for whatever reason. They're voting with their money. They aren't like UTs/OEICs which are bought and sold at roughly par regardless of whether they're very successful funds or complete dogs.

So if you want to know which are the most popular or highly rated ITs, they are likely to be the ones selling at the highest premium - but buying them just because they're expensive wouldn't make much sense. What you need is to find are ITs that suit your investment objective or perhaps are cheap because they are being under-rated - which is not too easy to do unless you know something that other experienced investors don't.

The exceptions on discounts are ITs where the managers have a policy to manager the premium/discount. Well known examples are Finbury (FGT) a UK equity income IT, Foreign & Colonial (FRCL) a global IT, Personal Assets (PNL) a lower risk IT run by Sebastian Lyons, etc. These will be managed to either keep them at par or within a narrow range.

You can get recommendations on Investors Chronicle http://www.investorschronicle.co.uk/funds-and-etfs/top-100-funds/, Trustnet, Morningstar, etc. though arguably their opinion is little better than anyone else's and with IT's it's likely to already be in the price set by the market.

The better approach is to decide what you want to achieve then choose the investments to do it. Bear in mind too that a lot of the return on ITs in recent years has been due to the closing of discounts so don't assume they'll definitely continue to do as well relative to funds as they have done - there's a limit to how much discounts can close. Taking higher risks can give better returns but might not. That's why it's called risk.

What type of discount should I look out for?

For instance, I'm looking at SMT for a global IT and FAS for Asia Pacific Ex Japan - are the discounts on these very low or reasonable for the performance?