Global Investment Trusts

ColdIron

Hmm, I think I see the confusion, perhaps I could have expressed it better by saying - It's probably one of the best dividend payers of the bunch in your shortlist

Audaxer

ColdIron wrote: »

Hmm, I think I see the confusion, perhaps I could have expressed it better by saying - It's probably one of the best dividend payers of the bunch in your shortlist

ColdIron, just out of interest, when you invested in Bankers IT was the yield a lot higher, i.e. were you getting a yield of around 4% at that time, and is it only due to the capital value increasing more that the dividend increases that the yield is now lower for new investors? I'm just trying to understand why the yield on some ITs are low despite the many consecutive years of dividend increases.

ColdIron

It was 2.77 on my first purchase if I recall, but essentially yes. The yield is a function of the dividend paid and the share price

If you look at the last five years figures you will see that they have managed to increase the dividend year on year in absolute terms

Dividend Paid (Pence per share - 2016 2015 2014 2013 2012)
17.00p 15.80p 14.80p 14.13p 13.33p

Dividend Growth
7.59% 6.76% 4.74% 6.00% 4.96%

But that the yield (which is just a statistical metric) has gone up and down and this is a reflection of the share price

Yield
2.50% 2.60% 2.60% 2.40% 3.10%

Simplistically, if the share price doubled but the Directors maintained the dividend (in pence per share) the yield would halve but your income would still pay for the same number of Jaffa Cakes or Caribbean cruises

However the OP isn't interested in this, he is more concerned about the total return however it comes about. Don't forget that with ITs you are buying into the company that runs the trust and not the underlying shares in the same way as you would a fund. It would be quite possible to have two companies invested in the same basket of shares but one elects to reward its shareholders by paying out its profits as dividends while the other retains them to maximise the share price

MPN

ColdIron wrote: »

If you look at the existing funds and the ones on the shortlist I don't think the OP is looking for yield, hence the reinvestment suggestion

Thank you for your input in this thread ColdIron and you are quite right we are not looking for yield/income from our ISA's but the total return/growth.

At the moment we have narrowed the list down to three - Witan, Bankers and because of the discount Caledonia. I will definitely go for Witan so I will leave my wife to decide between Bankers or Caledonia (I personally would go for Bankers but I'd be foolish to interfere)!

Audaxer

ColdIron wrote: »

It was 2.77 on my first purchase if I recall, but essentially yes. The yield is a function of the dividend paid and the share price

If you look at the last five years figures you will see that they have managed to increase the dividend year on year in absolute terms

Dividend Paid (Pence per share - 2016 2015 2014 2013 2012)
17.00p 15.80p 14.80p 14.13p 13.33p

Dividend Growth
7.59% 6.76% 4.74% 6.00% 4.96%

But that the yield (which is just a statistical metric) has gone up and down and this is a reflection of the share price

Yield
2.50% 2.60% 2.60% 2.40% 3.10%

Simplistically, if the share price doubled but the Directors maintained the dividend (in pence per share) the yield would halve but your income would still pay for the same number of Jaffa Cakes or Caribbean cruises

However the OP isn't interested in this, he is more concerned about the total return however it comes about. Don't forget that with ITs you are buying into the company that runs the trust and not the underlying shares in the same way as you would a fund. It would be quite possible to have two companies invested in the same basket of shares but one elects to reward its shareholders by paying out its profits as dividends while the other retains them to maximise the share price

Thanks ColdIron, I'm impressed by the dividend growth percentages. If for example someone looking for income (and apologies to the OP as I know he isn't) invested say £5k now in something like City of London IT at around 4% yield they would be receiving income of £200 per annum. If there followed say a 50% equity crash and City of London IT share price dropped in value by about the same percentage, and the person invested a further £5k at that time, the yield would have doubled. Assuming the IT was able to keep up their long record of growing income, they would receive £400 per annum growing income on the second £5k invested as they would have bought double the number of shares this time with their £5k. Is my understanding correct?

StellaN

MPN wrote: »

Thank you for your input in this thread ColdIron and you are quite right we are not looking for yield/income from our ISA's but the total return/growth.

At the moment we have narrowed the list down to three - Witan, Bankers and because of the discount Caledonia. I will definitely go for Witan so I will leave my wife to decide between Bankers or Caledonia (I personally would go for Bankers but I'd be foolish to interfere)!

I just looked on Trustnet and Witan and Bankers have produced annualised results over a 10 year period of 10.4% and 9.7% which in my opinion is very good. However, Caledonia have a lower result of 6% over this period.

The cumulative results over 10 years is Witan (168.9), Bankers (151.9) and Caledonia (78.7).

I know the old saying that past performance cannot be compared to future performance due to a number of factors including change of manager etc. However, I would be inclined to mention these figures to your wife and look on Trustnet because it may tip the balance for Bankers over Caledonia.

atush

ColdIron wrote: »

I've had Bankers for a number of years and have recently added it to my SIPP. It's probably one of the best dividend payers of the bunch (which it has increased for 50 odd years) so be sure to reinvest them. It trades at a discount right now and has a low ongoing charge. If I was looking for growth Witan would be on my radar. If you don't want to hold all five of them Trustnet has a correlation tool so you could plug them in and whittle out one or two with the most overlap if you want

Yes Bankers is on my buy list, for the decumulation phase coming up.

bowlhead99

StellaN wrote: »

. However, Caledonia have a lower result of 6% over this period.

The cumulative results over 10 years is Witan (168.9), Bankers (151.9) and Caledonia (78.7).

I know the old saying that past performance cannot be compared to future performance due to a number of factors including change of manager etc. However, I would be inclined to mention these figures to your wife and look on Trustnet because it may tip the balance for Bankers over Caledonia.

If you look over 1 year Caledonia vs Bankers is similar, each returning 29-30%

If you look since 1995, Caledonia vs Bankers is similar, each returning 640-650%

Of course, with nothing much between their absolute performances over a very short (1 year) or very long (32 year) period, you might like to arbitrarily say that 10 years is going to be more reflective of future performance because it's more recent than periods like '95 to 03 when Bankers was better or '03 to 09 when Caledonian was better.

But if you were going off the most recent ten years, and saying Bankers was better based off that recent and pertinent data, why not extend the logic and look at the last five years for even more recent, pertinent data? Over five years to this week, Caledonian was better by more than a clear 1% percent per year annualised.

Although, when you slice it into smaller chunks, Caledonian has a great quarter from first week of April 2014 to first week of July 2014 when it grew by 15% while Bankers flatlined. That made up for Bankers beating it in the other four years out of the last five.

See, if you cherry pick dates you can prove absolutely anything you want about who had the "best" performance. And "best" is a thing that covers suitability for an objective so ideally considers volatility and not just headline annualised return or cash on cash multiple.

I don't think the pure outperformance from Bankers over last 10 years is necessarily more important than the last five or last fifteen, where Caledonian was ahead. So, if you are showing your wife some data to make a point and colour her judgement one way or another... show her all of it and realise that there are alternate points of view when you have more information.

So, you should look at other factors such as what is its approach, what countries or sectors does it invest in and why, how does it fit with your wider portfolio, do they try to do all the stock picking themselves or pay fees to specialists for broader coverage, do they restrict themselves to developed markets or liquid listed companies. If the returns are pretty comparable over 1 year and 30+ years but each has its peaks and troughs at different times along the way, there's a case for holding both.

Some would certainly be of the opinion that Caledonian seems fine, has a broadly sensible multi-pronged approach to its allocation, and has more assets under management after its sixty years in business so they are probably doing something right. You wouldn't be a fool for selecting them over Bankers just because Bankers happened to do better over a specific decade.

I hold neither.

ColdIron

Audaxer wrote: »

Is my understanding correct?

Basically, yes

dividendhero

bowlhead99 wrote: »

I hold neither.

Why not? I've held both for ages and topping up on both....