'Equivalent' investment trusts

squirrelpie

I have an ISA and a SIPP with HL and historically have bought various funds in those wrappers. Now I understand a bit more about how the charges work, and the importance of minimising charges, I'm looking at replacing those funds with stocks instead. I currently think that investment trusts are sensible, along with ETFs.


So I listed all the funds I own and started trying to analyse what they are and whether there are IT equivalents, and which ITs are good or are dogs etc. It seems like it will be a hard grind. So I wondered if there are any tools on the intertubes that might help? Does anybody know of any site that compares funds against investment trusts etc?

ColdIron

Not a comparison but you might find the AIC useful for investment trusts and companies
https://www.theaic.co.uk/aic/find-compare-investment-companies

aroominyork

On a semi-related point of comparison between ITs and their closest equivalent funds, I have always seen four differences:
- the IT can invest in less liquid companies
- the IT can gear
- fees might differ
- the IT's premium/discount.

I instinctively thought that an IT that gears would increase my potential upside and downside risk, but walking to work this morning I realised that might be wrong. Say an IT releases £1bn of shares and then gears at 110% by borrowing £100m to buy more shares. This just means another 10% of people can invest - it doesn't affect the value of my underlying holdings. The only impact on me is that supply has increased which might reduce the premium or increase the discount. Is that correct?

dunstonh

Now I understand a bit more about how the charges work, and the importance of minimising charges, I'm looking at replacing those funds with stocks instead.

Since RDR, the cost difference between OEICs/UTs and ITs/ETFs has gone. Indeed, you often find the UT/OEIC is now cheaper.

Has where you have "obtained" your knowledge updated to current information or is it still giving out old duff information?

Alexland

Dunstonh the OP is probably thinking of the HL platform charge cap for holding shares, etfs or ITs.

DrSyn

IT's are more complicated than funds to understand.

https://monevator.com/investment-trusts-explained/

Make sure you fully understand what the terms gearing & the premium/discount mean with respect to IT's as they will effect the share price. Also make sure what they are for the IT you are interested in, before buying it.

https://www.itinvestor.co.uk/2019/02/kids-the-gloves-are-off/


The site mentioned by ColdIron is a good place to look for IT information.

https://www.theaic.co.uk/aic/find-compare-investment-companies

Also look around

https://lipperleaders.com/index.aspx

http://www.morningstar.co.uk/uk/investmenttrusts/default.aspx

squirrelpie

Dunstonh the OP is probably thinking of the HL platform charge cap for holding shares, etfs or ITs.

Exactly.


Thanks for all the suggestions, everybody. Not quite what I'm hoping for yet but I suspect I may be looking for unicorns (in the traditional sense, not the new-fangled one).

masonic

There are a handful of funds where the manager also runs an IT. That doesn't mean they will be "equivalent".

The process for choosing ITs is rather similar to choosing funds. So what led you to choose the funds in which you are currently invested? Hopefully your answer is not the Wealth 150/50.

DrSyn

squirrelpie

If all you are looking for is to cut the cost at HL then just use ETF's instead.

Otherwise consider switching to another platform with a cheaper charge for the same funds you already hold. Just make sure they have those funds on that platform before switching.

The following might be of interest.

http://www.comparefundplatforms.com/compare

https://monevator.com/compare-uk-cheapest-online-brokers/

Alexland

squirrelpie wrote: »

Thanks for all the suggestions, everybody. Not quite what I'm hoping for yet but I suspect I may be looking for unicorns (in the traditional sense, not the new-fangled one).

For a passive investor switching from fund(s) to ETF(s) tracking the same index(s) is mostly a calculation of the difference in management & transaction costs, platform ongoing and trade fees (particularly if the ETF is regularly distributing). If the ETF isn't very liquid then you might also need to consider the impact of the bid/ask spread. HL do some good discounted passive (L&G International) and multi asset (Blackrock Consensus) funds so the account needs to be big enough for a switch to ETFs to be worthwhile.

Active funds and ITs have their own management approach and it's unlikely you will find a match in underlying holdings. Sometimes you do see similarities where they have the same fund manager such as Nick Train or Ballie Gifford. It's not worth switching to ITs only to save platform fees as they are a different beast with discount / premium and gearing so you should assess if you actually want to hold them rather than looking for copies of your existing funds.

Alex

jimjames

aroominyork wrote: »

I instinctively thought that an IT that gears would increase my potential upside and downside risk, but walking to work this morning I realised that might be wrong. Say an IT releases £1bn of shares and then gears at 110% by borrowing £100m to buy more shares. This just means another 10% of people can invest - it doesn't affect the value of my underlying holdings. The only impact on me is that supply has increased which might reduce the premium or increase the discount. Is that correct?

That's not my understanding. 10% more people can't invest because there is no change to the number of shares in issue, that is fixed. It means that the value of assets at work is now £1.1 billion for the existing shareholders. That might be a good thing if markets rise but a bad thing if they fall and the gearing exacerbates the drop.