Considering Investment Trust investment

Sally57

StellaN wrote: »

Yes, they are incredible figures but will they continue to perform well in the future?

I suppose, at least with such a well experienced fund manager like Nick Train then the UK fund/trust certainly has a great chance of continued success in performance!

He's been delighted with these investments, however before he invested in these funds/trusts he was advised by his previous financial advisor that he shouldn't really hold a fund and trust in the same sector which fortunately he ignored and is very happy with the results so far!

bowlhead99

Sally57 wrote: »

however before he invested in these funds/trusts he was advised by his previous financial advisor that he shouldn't really hold a fund and trust in the same sector which fortunately he ignored and is very happy with the results so far!

The advice was sensible though. If he had put all the money that he ended up splitting between LT and Finsbury into one or the other, he would have either got 125% or 120% return on all the money, instead of the blended average of 122.5%. Similarly in the global sector if he'd flipped a coin on the two investments you mentioned he'd have either 174 or 154, neither of which are very far removed from the average of the two which he actually got of 164.

So, seems little grounds for saying you're glad he ignored the advice to not bother with lots and lots of products covering the same area.

A couple of things in the same sector is fine. Maybe even three if you want to hedge your bets and are unsure between managers and styles. But to buy two IT's/funds with big overlap which delivered very similar returns and then be really glad you ignored the advice to not bother with overlapping funds/ITs, doesn't make a whole lot of sense.

StellaN

bowlhead99 wrote: »

The advice was sensible though. If he had put all the money that he ended up splitting between LT and Finsbury into one or the other, he would have either got 125% or 120% return on all the money, instead of the blended average of 122.5%. Similarly in the global sector if he'd flipped a coin on the two investments you mentioned he'd have either 174 or 154, neither of which are very far removed from the average of the two which he actually got of 164.

So, seems little grounds for saying you're glad he ignored the advice to not bother with lots and lots of products covering the same area.

A couple of things in the same sector is fine. Maybe even three if you want to hedge your bets and are unsure between managers and styles. But to buy two IT's/funds with big overlap which delivered very similar returns and then be really glad you ignored the advice to not bother with overlapping funds/ITs, doesn't make a whole lot of sense.

I can understand the overlap on the UK IT/ Fund managed by Nick Train because he invests mainly in the same companies for both.

However, does the Old Mutual Global Equity overlap Scottish Mortgage in the same way?

bowlhead99

StellaN wrote: »

I can understand the overlap on the UK IT/ Fund managed by Nick Train because he invests mainly in the same companies for both.

However, does the Old Mutual Global Equity overlap Scottish Mortgage in the same way?

I haven't looked though I doubt it because SMT's holdings are pretty concentrated and specialist while Old Mutual have 500 holdings. Both have Google in the top ten for example but they have quite different strategies.

The advisor's point was simply, you don't need to hold an IT *and* and an open ended fund in the same sector - especially two managed by the same manager in the same sector with the same objective. Just like if ITs didn't exist, you wouldn't need two similar open ended funds in the same sector either.

If you are holding something very specialist and conviction-driven like SMT, you probably do also want something more 'mellow' in your 'global generalist equities' sector, IMHO - assuming you aren't already using regional funds instead of global generalists.

bottleandahalf

Near 8% discount now. Surely worth an investment?

bowlhead99

bottleandahalf wrote: »

Near 8% discount now. Surely worth an investment?

City of London (the trust prompting this thread) is not on that discount and neither is the most recent one mentioned, Scottish Mortgage. From the size of discount you mention, I'm guessing that of the 7 different trusts on this thread you are talking about the Edinburgh investment trust, last mentioned over eight months and twenty posts ago. Is that right, or do you mean something else?

A discount on its own is not necessarily a reason to invest. You could end up selling at a bigger one. And if the discount stays rougly constant it doesn't really insulate you from drops. The discount reflects what the market thinks of the prospects of the trust and the inherent risks of using it versus buying the individual underlying components at their market prices. So if it is a higher discount than it was eight months ago you should consider the reasons for that.

I've made money in the past by buying something on a discount and holding while sentiment improves, but it's not a one way meal ticket no-brainer decision. So, do you have more insight to offer us than 'surely worth an investment'? Beyond what investment it is that you're talking about?