Global Investment Trusts

Thrugelmir

Audaxer wrote: »

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?

IT's are dependent on the companies they invest in. The growth is only because not all income received is distributed. Some is held back in reserve. When BP suspended it's payout due to Deepwater Horizon. IT's had to call on reserves to maintain their payouts. Depleting reserves reduces capital asset value. There's nothing magical about ever increasing dividends. I'd focus on acquiring the IT shares on price weakness, i.e. discount to NAV when making comparisons.

Stirfry

Thrugelmir, but what happens to heavily discounted IT's when markets tumble?

Audaxer

Stirfry wrote: »

Thrugelmir, but what happens to heavily discounted IT's when markets tumble?

Would it only be a problem if you wanted to sell in a market crash? I was thinking discounts would probably get bigger when markets tumble, and it would be a good time to buy into an IT with a long history of dividend growth, as you would get a lot more shares for your investment and therefore even higher dividend levels?

copthis1

FAO: ArchBair

Which funds have you selected? (if you don't mind me being nosey)

Thrugelmir

Stirfry wrote: »

Thrugelmir, but what happens to heavily discounted IT's when markets tumble?

Exactly the same as any other trust. Though trusts trading at a premium are more likely to suffer bigger falls in share price. Price is ultimately determined by a number of factors. Not just underlying NAV but the equilibrium between buyers and sellers of the stock.

Many IT's have remits to buy their own shares and hold them in Treasury. Something worth monitoring. As it's this action that often causes discounts to narrow over time.

I'm not suggesting buying on discount alone. Given the choice of 2 IT's one at a 3% premium and the other at a 9% discount. Holding very similar stocks in the portfolio. Then there's an opportunity to turn a profit for doing relatively little. Though one needs to be patient.

ArchBair

copthis1 wrote: »

FAO: ArchBair

Which funds have you selected? (if you don't mind me being nosey)

No problem, I hold Henderson Global Growth (long term manager and good returns over the years), Lindsell Train Global Equity and Fidelity Global Special Situations. There is some crossover (both Henderson and Fidelity funds hold Apple and Alphabet in their top 10 holdings), but they are still diverse enough in my opinion.

I am currently learning more about Global IT's because I think my global portfolio could benefit from the right IT (1 or 2 possibly).

Sally57

ArchBair wrote: »

No problem, I hold Henderson Global Growth (long term manager and good returns over the years), Lindsell Train Global Equity and Fidelity Global Special Situations. There is some crossover (both Henderson and Fidelity funds hold Apple and Alphabet in their top 10 holdings), but they are still diverse enough in my opinion.

I am currently learning more about Global IT's because I think my global portfolio could benefit from the right IT (1 or 2 possibly).

If you want to do some research on global IT's then you could consider Monks, Witan, Bankers etc all good IT's but see if they compliment your UT global holdings?

dividendhero

Thrugelmir wrote: »

I'm not suggesting buying on discount alone. Given the choice of 2 IT's one at a 3% premium and the other at a 9% discount. Holding very similar stocks in the portfolio. Then there's an opportunity to turn a profit for doing relatively little. Though one needs to be patient.

For income seeking investors, all things being equal the 9% discount IT will yield 12% more income than the 3% premium IT:beer:

dutchism1958

friends of ours have Murray International,Witan,Caledonian, Bankers and City of London IT in their portfolio.
I understand that City of London is a UK IT but the others are all global.
Is this not over duplication,or am I missing something.
I know that all are well thought of and that Caledonian is at a 13% discount but this seems excessive??.
They do have a six figure portfolio.
I hold City of London for the UK & Bankers + Caledonian for global.

dividendhero

dutchism1958 wrote: »

friends of ours have Murray International,Witan,Caledonian, Bankers and City of London IT in their portfolio.
I understand that City of London is a UK IT but the others are all global.
Is this not over duplication,or am I missing something.
.

I wouldn't say that's over duplication at all.

For example Caledonian holds siginificant unlisted investments (which may well explain large discount) but none of the others do.

I hold all of the ones you mention and perfectly happy, only niggle is that MYI had a period of under performance a few years back