SIPP/ portfolio advice

Thrugelmir

Moe_The_Bartender said:

noClue said:

Voyager2002 said:

noClue said:

what is the "practical" advantage of investment trust over diversified mutual index fund?

If an investor in an IT wants their money, they sell their holding to someone else.

Moreover, this means that an IT can hold things that would be difficult to sell in the short term but profitable in the long run (property is the obvious example). An IT can thus work well for someone who wants to hold their investment for an extended period.

Two questions if I may. What if no one wants to buy when I sell? How does this "an IT can hold things that would be difficult to sell in the short term but profitable in the long run" affect me? Does it mean that because it may take IT a long time to sell their physical properties for a high profit, thus investor would have no choice but "wait" for that happen?

You can buy or sell shares in an IT at any time. You might just not like the price.

Might be times when market liquidity is thin depending on the trust and the volume being traded. 

AnotherJoe

noClue said:

AnotherJoe said:

noClue said:

what is the "practical" advantage of investment trust over diversified mutual index fund?

Also,  you can't get locked into an IT in the same way you can with a fund which can freeze trading if things get out of whack.

like Neil Woodford?

Yep. Or as happens from time to time with property funds. 

AnotherJoe

noClue said:

Voyager2002 said:

noClue said:

what is the "practical" advantage of investment trust over diversified mutual index fund?

If an investor in an IT wants their money, they sell their holding to someone else.

Moreover, this means that an IT can hold things that would be difficult to sell in the short term but profitable in the long run (property is the obvious example). An IT can thus work well for someone who wants to hold their investment for an extended period.

Two questions if I may. What if no one wants to buy when I sell? How does this "an IT can hold things that would be difficult to sell in the short term but profitable in the long run" affect me? Does it mean that because it may take IT a long time to sell their physical properties for a high profit, thus investor would have no choice but "wait" for that happen?

Your assumptions are incorrect, hence your conclusions are. 

You can sell an IT in a  few seconds at its current price. It's no different to selling an Exxon share. 

And like an Exxon share its current price is a determined by supply  and demand. The Exxon management have no say in it.  So, currently investors think the assets that Exxon holds in the form of oil fields are worth much less than they were a year ago, and so the share price is lower than the theoretical value of all the assets. Same with an IT. And the price of either is simply a match of supply and demand between investors. Nothing to do with Exxon or the IT. 
In contrast, With a FUND, the fund managers are the ones that manage buying and selling and have to come up with the cash if there are too many sellers. And the only way they can get that cash is by selling a property (once they've used up their small reserve) and that obviously isa long term process if you are trying to sell, say a shopping mall. And so at some point they have to suspend trading because the only way to sell that mall is at fire sale prices which would be unfair to people who want to hold. 

If you had an IT that had a shopping mall as one of its assets, the IT shares can be bought or sold irrespective the status of the shopping mall. If people think the shopping mall isn't worth much, the IT shares will be corresponding cheaper but you can buy or sell them in an instant and if you don't like the price you'd get for selling you can wait. With a fund you  don't get that option or it may be forced on you. 

HTH 

Voyager2002

noClue said:

Two questions if I may. What if no one wants to buy when I sell? How does this "an IT can hold things that would be difficult to sell in the short term but profitable in the long run" affect me? Does it mean that because it may take IT a long time to sell their physical properties for a high profit, thus investor would have no choice but "wait" for that happen?

Your share in an IT is just the same as a share in a company: if the price is low enough then someone will buy.

As for your second question: the IT would not sell its holding in something like property unless someone offered to buy it for a good price. If an investor wants his cash then the investor sells his share to someone else rather than asking the IT to sell its holdings in order to get his money out.