investment trusts

Thrugelmir

atush wrote: »

They also are a bit more liquid, as the shars are sold into t he market and they dint suffer like funds do when they have tos ell underlying investments to pay out to those cashing in.

Likewise when you are buying into a trust. As the assets are already owned. With an open ended fund assets have to bought. Investors seem to forget that they are part of the market not idle bystanders. Their buying will contribute to pushing a share price higher. As with all fads. The impetus becomes self fulfilling. No thought is given to fundamentals.

dividendhero

Brown_Bear wrote: »

What makes me cautious is when ITs use debt to buy companies that are themselves using debt. So the risks to the IT buyer are magnified.

Fair point, you'd think the likes of trustnet or HL would be able to calculate this...

Sue58

StellaN wrote: »

If you really prefer to go down the global IT route then I personally prefer and invest in the F&C Investment Trust.

The OCF for F&C is 0.79% whereas Bankers is less at 0.52%.

JohnRo

Sue58 wrote: »

The OCF for F&C is 0.79% whereas Bankers is less at 0.52%.

I wouldn't get too hung up on charges. They are different. What about current and historical discount levels and the trend?

FWIW the KID states charges of 1.12% vs. 0.96% respectively.

Despite higher charges (or perhaps because of ) FCIT has superior historical performance over the last 10 year period regardless.

The only time to let charging dictate (imo) is when looking at purchasing one of various funds tracking the same index. In that case and few others you are being charged more or less for essentially the same thing, even there methodology and tracking error is also a factor.

egg93

Thanks, Alexland. Do you think too much home bias is problematic in the long run for consensus 85 or VLS? That is the main reason why I went for an all-cap index in the first place. Will definitely look to add a global bond index.

Alexland

egg93 wrote: »

Thanks, Alexland. Do you think too much home bias is problematic in the long run for consensus 85 or VLS? That is the main reason why I went for an all-cap index in the first place. Will definitely look to add a global bond index.

Honestly in the long run it might not make a huge difference as some of the larger UK companies have significant overseas earnings. Its more important you have confidence in your choice and feel comfortable holding it through the good and bad times.

The thing I like about 2 fund portfolios is that when the stock market falls and you have those dangerous thoughts to 'do something' you can rebalance to your target allocation (or a bit more if feeling adventurous) and feel good you have done the right thing selling some bond fund units and buying more equity fund units. You can then do a quick calculation of how much money the account will be worth whenever the fund unit prices next return to their historic highs which gives a preview of future returns.

Multi asset funds are also fine and I use them in our smaller investment accounts.

Alex

short_butt_sweet

Alexland wrote: »

The thing I like about 2 fund portfolios is that when the stock market falls and you have those dangerous thoughts to 'do something' you can rebalance to your target allocation (or a bit more if feeling adventurous) and feel good you have done the right thing selling some bond fund units and buying more equity fund units. You can then do a quick calculation of how much money the account will be worth whenever the fund unit prices next return to their historic highs which gives a preview of future returns.

a "preview" - is that a [fx: a dramatic duh-duh-DDUUUUURRRR] prediction? you are choosing to be optimistic about equities bouncing back from setbacks, but there is nothing special about a previous historic high. if equities get into a huge bubble valuation, then there is no reason to expect them to retrace the high any time soon after a crash.

now, if thinking like this helps you feel happy with what you're doing, so you will stick to your plan, that is good. sticking to a plan is vital in investing, and we may have to play psychological tricks with ourselves to make ourselves do that. because investing is in some ways counter-intuitive.

Multi asset funds are also fine and I use them in our smaller investment accounts.

and on the psychological level, i think multi-asset funds will work better for a lot of people. because if they can just stick their head in the sand and not watch doom-laden stock market reports when things are going badly, their fund will do the rebalancing for them. all they have to do is leave it alone, and not panic-sell.

Alexland

short_butt_sweet wrote: »

you are choosing to be optimistic about equities bouncing back from setbacks, but there is nothing special about a previous historic high. if equities get into a huge bubble valuation, then there is no reason to expect them to retrace the high any time soon after a crash.

Yup I am an optimist and did say 'whenever' in recognition it could be a week or it could take years for the equity and/or bond fund units to recover in value.

I agree there is nothing particularly special about a historic unit price high other than its a tangible number you can reasonably consider possible in future if you are patient (and live long) enough. It's just satisfying doing the multiplication after a drop and rebalance to consider how an account could bounce back stronger.

Alex

londoninvestor

short_butt_sweet wrote: »

and on the psychological level, i think multi-asset funds will work better for a lot of people. because if they can just stick their head in the sand and not watch doom-laden stock market reports when things are going badly, their fund will do the rebalancing for them. all they have to do is leave it alone, and not panic-sell.

That makes sense in principle, but quite a few threads on here are from people who find it very difficult to "sell units at a loss", even if the units are in a fund that is automatically rebalancing itself. For example the idea of buying a mixture of VLS20 and VLS100, then when you need the cash selling the VLS20 if markets are low and the VLS100 if markets are high.

Actually there's probably a marketing opportunity for the multi-asset providers to better expound the benefits of the fund doing its own rebalancing