Investment Trust choices

Sally57

Sue58 wrote: »

Yes, the L&G tracker does comes very close to Bankers so maybe it is a closet tracker but it is managed by a respected long term manager.

You are not comparing 'like for like', however, I would think F&C and also Witan with their large amount of holdings are closer linked to trackers than Bankers?

I hold Bankers because I like the geographical and sector mix and also feel that Alex Crooke is a good active manager.

A_T

bowlhead99 wrote: »

A "closet tracker" is a somewhat derogatory term for an active fund run by a lazy manager that just pretty much follows an index while charging you active management fees for the privilege.

Looking individually at the years 2013, 2014, 2015, 2016, 2017 it doesn't seem to be a "closet tracker" at all, giving a result that varies quite a bit from what the L&G index is doing.

Ignore Scottish Mortgage on the graph which has stretched out the scale and made the graph less usable to review L&G vs Bankers. Just zoom in to the individual years and imagine you had £100 invested at the start of one of those years in both L&G and Bankers and what % gain or loss you would get over the next 12 months. The relative returns are all over the place.

2013 Bankers 28% vs LG 22%
2014 Bankers 3% LG 12%
2015 Bankers 11% LG 4%
2016 Bankers 14% LG 30%
2017 Bankers 29% LG 13%

L&G being a market-cap based developed-world-ex-UK index has approaching 60% of its equities in the USA and nothing in the UK or emerging markets. While Bankers has under 30% in USA and over 25% in the UK, with a small amount of emerging markets exposure. So, they don't do the same thing at all, and when in 2016 a dollar became worth 20% more pounds (67p to 81p) the L&G fund with its massive dollar exposure outperformed Bankers significantly, an effect which would have contributed to a bit of a reversal the following year.

So, Bankers is nothing like buying the L&G developed world ex-UK index, even if by coincidence one has returned 86% and the other 87% over the five years to today; in the individual years the performance differential was +7%, -9%, +7%, -16%, +16%. To look at a chart where its numbers have been squashed together with another fund into the bottom half of the picture and say "maybe it is a closet tracker" is the laziest analysis in the world, or perhaps just throwing out buzzwords without knowing what they mean.

The LG fund is chosen here because it is the oldest running passive global index tracker in GBP. It may be ex-UK but as UK is only 6% of capital markets it makes little difference and behaves much the same as an All-World tracker.




The point is that over time a trust/fund/etf holding a range of developed world large cap stocks is likely to do little more than track the world index. So why would one want to pay a 0.44% charge and 0.5% stamp duty every time one buys it?

One might look at the holdings in Bankers and think "I like that". Question is why does one like it? What gives one the edge to think it's a set of holdings that will perform better over time than a tracker?

aroominyork

Bankers is 26% invested in the UK but its factsheet uses the FTSE All Share Index as its reference for performance. That's not setting the bar at a very high or appropriate level.

A_T

aroominyork wrote: »

Bankers is 26% invested in the UK but its factsheet uses the FTSE All Share Index as its reference for performance. That's not setting the bar at a very high or appropriate level.

It makes for an impressive-looking graph though

ArchBair

aroominyork wrote: »

Bankers is 26% invested in the UK but its factsheet uses the FTSE All Share Index as its reference for performance. That's not setting the bar at a very high or appropriate level.

The point is that most people who hold Bankers (including myself) like the mix of some income and well as growth and the diversification in both regions and sectors. Bankers cannot be compared to other Global IT's such as SMT or Monks because they are pure growth IT's and have a higher risk exposure than Bankers.

So to compare global IT's, in my opinion you really need to compare Bankers to others in that catergory such as F&C, Mid-Wynd, Witan & Alliance Trust.

Sue58

It's not possible to compare a global IT to a tracker, you can compare performances but the strategies are totally different. Are they not?

cloud_dog

Sue58 wrote: »

It's not possible to compare a global IT to a tracker, you can compare performances but the strategies are totally different. Are they not?

But isn't the aim the same? Therefore, you could argue that whilst their strategy and component make up can differ significantly they are both trying to achieve the same thing; growth through investing globally.

Thrugelmir

Sally57 wrote: »

You are not comparing 'like for like', however, I would think F&C and also Witan with their large amount of holdings are closer linked to trackers than Bankers?

F&C has a sizable private equity holding. Something that trackers cannot offer. Portfolios need to be diversified. With the aim of making an overall gain every year. Profits exceeding losses. Nothing more. Chasing pots of gold at the end of rainbows is a fruitless waste of time.

aroominyork

ArchBair wrote: »

The point is that most people who hold Bankers (including myself) like the mix of some income and well as growth and the diversification in both regions and sectors. Bankers cannot be compared to other Global IT's such as SMT or Monks because they are pure growth IT's and have a higher risk exposure than Bankers.

So to compare global IT's, in my opinion you really need to compare Bankers to others in that catergory such as F&C, Mid-Wynd, Witan & Alliance Trust.

Performance charts compare to the sector, not to other funds/ITs within that sector. The fact that there are more aggressive options doesn't mean the fund should compare itself to a different sector altogether so as to look better on paper. Bankers is a global fund and its chart should show its performance against the global sector and not the UK. It is up to the investor to research whether the fund/IT sits at the more cautious or aggressive end of the IT spectrum before making their decision about whether to invest.

bowlhead99

aroominyork wrote: »

Performance charts compare to the sector, not to other funds/ITs within that sector. The fact that there are more aggressive options doesn't mean the fund should compare itself to a different sector altogether so as to look better on paper. Bankers is a global fund and its chart should show its performance against the global sector and not the UK. It is up to the investor to research whether the fund/IT sits at the more cautious or aggressive end of the IT spectrum before making their decision about whether to invest.

You are right, it is up to reach investor to research whether an investment option is suitable for their needs. It's in the AIC Global sector so you could compare with that if you like. Some 'sector averages' are meaningless anyway as what you get on average from something like the Specialist sector or the mixed asset 40-80% equity sector or whatever they're called, will be largely meaningless to what specific return you get from your specific fund. The point is, all investing is caveat emptor and it's up to you to determine your own benchmarks and comparables.

Drawing a graph of their own performance against a global sector of funds that might take more risks than them and/or charge more fees than them is not something that's useful for their marketing and if you are honest with yourself it would not be useful for you either because you have to review all the constituents of that 'sector' to determine where in it they fit based on their activities.

As they say in the KIID, it's suitable for investors with at least basic capital markets knowledge or experience of shares, who understand the trust's risks, are seeking long term growth in income and capital from a global portfolio, etc etc. So if you know what you are doing, do your due diligence and invest if you like it, and if you don't, don't. They don't have an obligation to second-guess all the things with which you might personally like to compare it as part of your due diligence process and stick them in a 20 year chart on the factsheet just in case.

Bankers_KIID wrote:

The company's objectives are to achieve long term asset growth in excess of the FTSE All-Share index and regular dividend growth in excess of the increase in the Retail Prices Index. The company's investment policy is to invest its assets in a portfolio primarily comprised of international equities. The portfolio is broadly diversified by geography and sector in order to reduce investment risk. Etc etc...

So, if they are telling you that their personal objectives for the trust are to get asset growth in excess of FTSE all share and that the way they propose to do that is by investing broadly across international markets to achieve that objective... there you have it. They can graph themselves against that benchmark that they set out to achieve. Having a chart against the FTSE is fine.

If you are not very sophisticated and think that to select investments all you need to do is check that the investment beat a self selected benchmark over a short period of time, good luck. However there is nothing fundamentally wrong in them saying their intention is to beat FTSE as long as they don't keep chopping and changing their benchmark every time another benchmark starts to look easier to beat.