Smithson Investment Trust

jayship

Smithson Investment Trust IPO price £10 per share. They intend to raise an initial £250 million by public offering and extra through intermediaries.

Being close ended investment is there a chance they may issue even more shares to meet demand if over subscribed? Will it trade at a premium is a guess. Is it worth waiting to see how it performs.

Forum members thoughts.

Prism

jayship wrote: »

Smithson Investment Trust IPO price £10 per share. They intend to raise an initial £250 million by public offering and extra through intermediaries.

Being close ended investment is there a chance they may issue even more shares to meet demand if over subscribed? Will it trade at a premium is a guess. Is it worth waiting to see how it performs.

Forum members thoughts.

It can scale up to £350 million if required. I imagine it is likely to trade at a premium after launch

Alexland

Prism wrote: »

I imagine it is likely to trade at a premium after launch

You are probably right but if so do you think it suggests we are in a market that seems to be selectively disregarding risk? Call me old fashioned but a premium to NAV should be earned and this is yet unproven. I wonder if the premium will get as high as the Lindsell Train trust.

Alex

Prism

Alexland wrote: »

You are probably right but if so do you think it suggests we are in a market that seems to be selectively disregarding risk? Call me old fashioned but a premium to NAV should be earned and this is yet unproven. I wonder if the premium will get as high as the Lindsell Train trust.

Alex

Maybe. FEET has been trading at a premium for most of its existence off the back of the main fund performance. I am assuming this will be similar.

It shouldn't get anywhere near to the LT trust premium as that is a bit of a unique case based on holding Lindsell Train itself. Some argue that its not at a premium at all but under valued.

RomfordNavy

Has anyone managed to use the smithsonipo.co.uk website to sign up to this IPO? I have been trying for days but can't get it to go past the details screen, no errors obvious just doesn't do anything when I click on continue.

Edit:
Have checked in the console and find the following error -

Error intercepting API call [object Object]
"Error intercepting API call"
{
[functions]: ,
__proto__: { },
error: { },
headers: { },
message: "Http failure response for https://www.smithsonipo.co.uk/api/retailapplication/MphyKXHn/detail: 400 Bad Request",
name: "HttpErrorResponse",
ok: false,
status: 400,
statusText: "Bad Request",
Symbol(observable)_h.7v886za9y5g: undefined,
Symbol(rxSubscriber)_g.7v886za9y5g: undefined,
url: "https://www.smithsonipo.co.uk/api/retailapplication/MphyKXHn/detail"
}

aroominyork

Alexland wrote: »

You are probably right but if so do you think it suggests we are in a market that seems to be selectively disregarding risk? Call me old fashioned but a premium to NAV should be earned and this is yet unproven.

Indeed. I would lump money into a smaller companies Trust that performs as well in its sector as Fundsmith does in its sector, but there is little to go on; the two managers have no record on Citywire. So would I sell my existing smaller company holdings and switch into Smithson? If I did and it performed well I would be glad the gamble paid off, but if it performed badly I would be intensely p1ssed off with myself for having sold funds with a track record. That means the answer is No.

But I expect there will be many takers, partly because global smaller companies is an uncrowded market for high profile, non-niche funds.

Alexland

Has anyone else noticed that Fundsmith will be charging their fee for this IT based on the Market Cap rather than the NAV? So essentially they are charging a fee to not just manage the underlying investments but also for the premium/discount they can maintain.

Fundsmith fees are already not-cheap and this tweak looks a bit greedy?

Alex

aroominyork

Alexland wrote: »

Has anyone else noticed that Fundsmith will be charging their fee for this IT based on the Market Cap rather than the NAV? So essentially they are charging a fee to not just manage the underlying investments but also for the premium/discount they can maintain.

Fundsmith fees are already not-cheap and this tweak looks a bit greedy?

Alex

I saw Terry interviewed on this. He said 1) it's more appropriate as it reflects the current market value of your holding, and 2) it incentivises Terry's team to have the IT perform well. I kinda buy the first, not the second.

PS. Thinking more about it, I hold an IT which is trading (deservedly) at a 15% discount. If I paid my fee on the discount price rather than NAV I would feel less aggrieved. While if I paid a fee based on the premium price on a strongly performing IT, I could swallow it as a performance fee. Makes sense, no?

Alexland

I am left scratching my head with Fundsmith. The owners manual once said they would be focused on one fund (ok technically these are trusts...) and Terry said they didn't believe in performance fees....

jimjames

Alexland wrote: »

I am left scratching my head with Fundsmith. The owners manual once said they would be focused on one fund (ok technically these are trusts...) and Terry said they didn't believe in performance fees....

Are they now charging performance fees?