Investment Trust Question

Bravepants

Most of my investments are in one of two accumulation funds; 25% of my investments are in a Global Equity fund and 75% are in a mixed-asset fund. I'm quite happy with my choice and I have no intention of changing these or adding other growth funds. I like the simple life!

I have been thinking about the virtues though of adding Investment Trusts for an income part of my portfolio and I have read a lot of pros and cons about this.

One question I have is: what are peoples' thoughts regarding the number of ITs to hold?

I was thinking that I perhaps may only want two ITs, say CTY (City of London for a bit of home bias) and a global one, say MYI (Murray International).

By comparison, I have seen other folks holding upward of a dozen or more ITs.

Any thoughts?

Thrugelmir

Bravepants said:

By comparison, I have seen other folks holding upward of a dozen or more ITs.

I hold IT's to gain exposure to certain market segments. Not to generate an income per se. IT's can be growth orientated as well. Why not switch your growth (or more likely accumulation) funds to income variants? 

Eco_Miser

I have about half a dozen, including those two. My thinking was get a bit of diversity in the management objectives and styles, and not put all eggs in one basket.

Bravepants

Thrugelmir said:

Bravepants said:

By comparison, I have seen other folks holding upward of a dozen or more ITs.

I hold IT's to gain exposure to certain market segments. Not to generate an income per se. IT's can be growth orientated as well. Why not switch your growth (or more likely accumulation) funds to income variants? 

Thanks for your reply. I guess I'm looking for something generating income close to the SWR...so at least 3% per annum. I have been tempted to change my growth funds to INC type on the run-up to retirement and just taking the income, even though it is less than the SWR; VLS60 is around 1.4% I think, although I haven't checked for a while.

Bravepants

Eco_Miser said:

I have about half a dozen, including those two. My thinking was get a bit of diversity in the management objectives and styles, and not put all eggs in one basket.

Same here. I have index funds for my growth portfolio, and wanted something more active. I've been drawn to those ITs because of the yield being greater than 3%, and of course their history. However, while my growth funds hold thousands of companies across the globe, those two ITs hold about 150!  

coastline

Not bad and decent yield.
JPMorgan Global Growth & Income plc Fund factsheet | Trustnet
Chart Tool | Trustnet

Bravepants

coastline said:

Not bad and decent yield.
JPMorgan Global Growth & Income plc Fund factsheet | Trustnet
Chart Tool | Trustnet

Perhaps. But is that the only IT you invest in?

My question was about the number of ITs that are sensible to hold; can I just hold one global IT like your JPMorgan and that's enough? 

I used CTY as an example of an IT that has been around for a very long time...presumably, I would do quite well if I stuck £50k in there for the next 30 years, and nowhere else? Or not?

Alexland

I had wanted to own CTY for years and bought it just before the Brexit deal was announced at Christmas and while it made us some money I just wasn't comfortable with the underlying deep value investments that Job Curtis was using to support that 5% dividend or the risk of it falling to a discount if he ever retired.
So I sold CTY at a premium to buy Murray Income MUT at a discount overall improving NAV by about 8%. Although MUT's dividend is 1% lower the underlining companies are better quality with more growth potential. Charlie Luke has been running the trust for a long time but is still only half way through his career and seems to have a better view of how to invest for income.
Most of our money is in global trackers so I consider MUT our UK bias and it helps me sleep well at night knowing our ISAs provide enough smoothed growing income to cover our mortgage payments and some of our bills. I have considered diversifying into other UK income trusts but none really seem as attractive.

maxsteam

Bravepants said:

what are peoples' thoughts regarding the number of ITs to hold?

If you are Chinese, you should aim for eight but certainly not four. If you are British, you should aim for seven but not thirteen. Superstitions apart, you might find one particular IT seems a little more professional than another, or that the holdings in one trust correspond better to your own investment ideas. While there's no particularly solid obstacle to having shares in dozens of ITs, the administration would put me off. I do feel, however, that you are approaching matters wrongly in looking for a suitable number to hold. To start with, if you have not held ITs before, you should start by buying shares in one.

BuildTheWall

Bravepants said:

Thrugelmir said:

Bravepants said:

By comparison, I have seen other folks holding upward of a dozen or more ITs.

I hold IT's to gain exposure to certain market segments. Not to generate an income per se. IT's can be growth orientated as well. Why not switch your growth (or more likely accumulation) funds to income variants? 

Thanks for your reply. I guess I'm looking for something generating income close to the SWR...so at least 3% per annum. I have been tempted to change my growth funds to INC type on the run-up to retirement and just taking the income, even though it is less than the SWR; VLS60 is around 1.4% I think, although I haven't checked for a while.

Check out SAIN. They have a decent dividend yield and some growth as well. Good track record. 

I believe anything more than 4-6 funds or trusts doesn’t add much value. Further diversification is not going to reduce risk greatly. And you are likely to choose underperformers just for the sake of adding more trusts. 

Google dividend heroes. Choose 4 trusts you are comfortable with, those that provide decent diversification. Don’t overcomplicate it. 

Apodemus

I have 13 ITs including MYI and CTY, but these are spread across growth, income and wealth preservation, with a couple of infrastructure ITs that are ultra-boring and will probably give a bond-like profile of reliable income but struggle to have capital values keep pace with inflation.