FundsNetwork and Available Investment Trusts

Oswulf

Is there any logic to the investment trusts available through Fidelity FundsNetwork? I wanted to invest in Caledonia [CLDN], but it's not available.  I'd like to think that's not because Caledonia refuses to pay Fidelity a kick-back, but I really can't think of any other reason.

Moe_The_Bartender

We’ll, for starters, CLDN isn’t a fund but an Investment Trust and so you won’t find it on FundsNetwork. In fact, Fidelity don’t offer it at all but there are many things that are not included in their offering. You’d need to use a different platform.

What are your reasons for choosing this particular trust? I've looked at it in the past and rejected it.

Alexland

It could be as simple as nobody has ever asked them to add it so you could try making a new request? Fidelity's range of exchange traded investments tends to be limited due to their history offering funds which is probably what most of their customers still use despite the attractive retail platform fee capping on exchange traded assets.

Moe_The_Bartender

I'm still keen to hear why the OP wants to put money into this trust. It’s basically 48% owned by the Cayzer family whose interests take priority over those of other investors. At first glance the 22% discount to NAV makes it look attractive but it’s always been around that figure and the family have no interest in doing anything that would dilute their interest. It invests in a lot of privately owned businesses and if you want to invest in private equity, there are better ways of doing it. Its performance has been pretty mediocre but in the end it’s all about wealth preservation. You don’t need more when you have £150m invested in the trust as your object is what all rich families do which is to hang on to what you’ve got.

Albermarle

I also looked at it once but decided to stick with the usual PNL and CGT wealth preservation trusts for the reasons outlined above.

Thrugelmir

Moe_The_Bartender said:

I'm still keen to hear why the OP wants to put money into this trust. It’s basically 48% owned by the Cayzer family whose interests take priority over those of other investors. At first glance the 22% discount to NAV makes it look attractive but it’s always been around that figure and the family have no interest in doing anything that would dilute their interest. It invests in a lot of privately owned businesses and if you want to invest in private equity, there are better ways of doing it. Its performance has been pretty mediocre but in the end it’s all about wealth preservation. You don’t need more when you have £150m invested in the trust as your object is what all rich families do which is to hang on to what you’ve got.

Dividend has been increased for 54 consecutive years. The interests of both the family and other shareholders are therefore aligned. The family is no position to narrow the discount. As would simply simply end up owning a greater % of the issued capital and need to address the impact that that would result from doing so. 

Moe_The_Bartender

Thrugelmir said:

Moe_The_Bartender said:

I'm still keen to hear why the OP wants to put money into this trust. It’s basically 48% owned by the Cayzer family whose interests take priority over those of other investors. At first glance the 22% discount to NAV makes it look attractive but it’s always been around that figure and the family have no interest in doing anything that would dilute their interest. It invests in a lot of privately owned businesses and if you want to invest in private equity, there are better ways of doing it. Its performance has been pretty mediocre but in the end it’s all about wealth preservation. You don’t need more when you have £150m invested in the trust as your object is what all rich families do which is to hang on to what you’ve got.

Dividend has been increased for 54 consecutive years. The interests of both the family and other shareholders are therefore aligned. The family is no position to narrow the discount. As would simply simply end up owning a greater % of the issued capital and need to address the impact that that would result from doing so. 

That’s basically my point. Some investors think that buying £1 of assets for 78p is a great opportunity when it isn’t.

Oswulf

Moe_The_Bartender said:

We’ll, for starters, CLDN isn’t a fund but an Investment Trust and so you won’t find it on FundsNetwork. In fact, Fidelity don’t offer it at all but there are many things that are not included in their offering. You’d need to use a different platform.

What are your reasons for choosing this particular trust? I've looked at it in the past and rejected it.

Uh, FundsNetwork does include investment trusts - but only a selection.  Hence my question.  What's the logic?

The investment isn't for me, but for an elderly, risk-averse relative.  I like the way it's managed conservatively with a long-term view, is well diversified, and generates pretty consistent returns.  The discount to NAV is an irrelevance for this trust.  

I consider it a better alternative to the likes of PNL (which for me is too conservative) and RICA (crazy dabbling in cryptocurrencies).  It also has superior long term performance.  10 year annualised is 9.5% as compared to 5.6% and 5.2% respectively.  Figures from Morningstar.

wmb194

Given that Caledonia is a FTSE 250 company it is an odd omission and looking through the list of available ITs on FundsNetwork it does include some tiny Aberdeen ITs e.g., Shires Income so I'm guessing size and liquidity aren't issues. This is the sort of thing that happens with stockbrokers, though, and it's why you often need to have accounts with at least a few to cover the bases you want to cover.

Thrugelmir

Moe_The_Bartender said:

Thrugelmir said:

Moe_The_Bartender said:

I'm still keen to hear why the OP wants to put money into this trust. It’s basically 48% owned by the Cayzer family whose interests take priority over those of other investors. At first glance the 22% discount to NAV makes it look attractive but it’s always been around that figure and the family have no interest in doing anything that would dilute their interest. It invests in a lot of privately owned businesses and if you want to invest in private equity, there are better ways of doing it. Its performance has been pretty mediocre but in the end it’s all about wealth preservation. You don’t need more when you have £150m invested in the trust as your object is what all rich families do which is to hang on to what you’ve got.

Dividend has been increased for 54 consecutive years. The interests of both the family and other shareholders are therefore aligned. The family is no position to narrow the discount. As would simply simply end up owning a greater % of the issued capital and need to address the impact that that would result from doing so. 

That’s basically my point. Some investors think that buying £1 of assets for 78p is a great opportunity when it isn’t.

Any fund that has Private Equity investments has to be treated with a degree of caution. Never any certainty that the valuation placed on the underlying funding rounds will come to fruition. While I don't hold this IT myself. I fully understand the attraction. There's something to be said when controlling parties have their own skin in the game. A reoccurring theme in my own portfolio. 

Oswulf

As suggested, I contacted Fidelity.  In response, no explanation of how ITs are selected for inclusion on the platform, and as for adding CLDN, the request has been forwarded to the appropriate department, but I won't be notified of the outcome.  I've been told to check in a few weeks, and CLDN may, or may not be there.