10 Investment Trusts for £100k SIPP pot?

tacpot12

Have a look at these. I hold all of them in my SIPP and am in drawing down an income: 

Law Debenture

The Bankers Investment Trust

JP Morgan Global Growth & Income

European Asset Trust

Schroder Oriental Income Trust

Audaxer

tacpot12 said:

Have a look at these. I hold all of them in my SIPP and am in drawing down an income: 

Law Debenture

The Bankers Investment Trust

JP Morgan Global Growth & Income

European Asset Trust

Schroder Oriental Income Trust

@tacpot12 as Bankers has a fairly low yield of around 1.8% compared to the others in your SIPP, I was wondering whether you just take the dividends from Bankers as income, or whether you sell some of the capital as well?

Thrugelmir

Audaxer said:

tacpot12 said:

Have a look at these. I hold all of them in my SIPP and am in drawing down an income: 

Law Debenture

The Bankers Investment Trust

JP Morgan Global Growth & Income

European Asset Trust

Schroder Oriental Income Trust

@tacpot12 as Bankers has a fairly low yield of around 1.8% compared to the others in your SIPP, I was wondering whether you just take the dividends from Bankers as income, or whether you sell some of the capital as well?

That will be as a consequence of it's low UK portfolio weighting. 

granta

Alexland said:

philng said:

I am always more attracted by low charges hence I currently hold Scottish Mortgage and Bankers which have both done well for me but just interested in any other possible ideas?

We hold passive VEVE and HMWO in our Fidelity SIPPs but having done so well I am tempted to switch some into Bankers for more balanced global exposure. The extra long term return from the leverage should cover the higher costs.

You might also want to consider putting some in the much unloved UK income sector using trusts that have an ESG filter to remove the dross with the remainder at reasonable valuations. DIG has been doing relatively well growing capital and dividends and to a lesser extent MUT for which the board has only given small dividend increases recently so is trading on a 7% discount but seems to be in a good position to give a more significant final dividend increase next year.

Just wondering the rationale for holding VEVE and HMWO together, and in what proportion? I hold HMWO in an ISA and now thinking of moving my pension to Fidelity for an ETF only portfolio with HMWO as a core holding. But need to learn more to understand whether to add anything else in. Thanks.

Alexland

granta said:

Just wondering the rationale for holding VEVE and HMWO together, and in what proportion?

Just one in each of our SIPPs to spread the risk between Vanguard and HSBC as ETFs unlike platforms have no FSCS protection. They are both heavy in US large caps so we use iShares WLDS in our LISAs to give a bit of small cap and an EM fund in our workplace pension so overall a bit like the Global All Cap index but with some home bias using MUT in our ISAs which helps me sleep knowing the smoothed dividends are enough to cover our mortgage, council tax, etc if we ever lost our jobs.
While I am tempted by Bankers there are lots of things that tempt me but nothing enough to make a change right now. I would be more tempted if my SIPP was going into drawdown anytime soon 

[Deleted User]

Alexland said:

granta said:

Just wondering the rationale for holding VEVE and HMWO together, and in what proportion?

Just one in each of our SIPPs to spread the risk between Vanguard and HSBC as ETFs unlike platforms have no FSCS protection. They are both heavy in US large caps so we use iShares WLDS in our LISAs to give a bit of small cap and an EM fund in our workplace pension so overall a bit like the Global All Cap index but with some home bias using MUT in our ISAs which helps me sleep knowing the smoothed dividends are enough to cover our mortgage, council tax, etc if we ever lost our jobs.
While I am tempted by Bankers there are lots of things that tempt me but nothing enough to make a change right now. I would be more tempted if my SIPP was going into drawdown anytime soon 

To be fair if you are having to claim on Vanguard and HSBC going bust on the 85k limit, I would be more wary of people turning up with machine guns nicking my things 

Alexland

Deleted_User said:

To be fair if you are having to claim on Vanguard and HSBC going bust on the 85k limit, I would be more wary of people turning up with machine guns nicking my things 

Yeah I know but given each account needs to hold something and the two ETFs are so very similar (am not bothered by the small technical differences between FTSE and MSCI indexes) then there is no harm using both.
Also as I use the HL app watchlist to track our investments on cheaper platforms it helps they are different ETFs as I can easily see each account valuation.

granta

I'm still trying to get my head around the ETF risks (compared with the equivalent fund).
I'm only interested in the very mainstream ETFs like HMWO, VEVE etc. If I understand the above correctly, if you held say £150k in HMWO and there was a platform failure (and does this relate to HSBC or Fidelity?), then you would only get back £85k for a fund and £0 for the same ETF? Though Deleted_User is maybe implying that this is either highly unlikely or that we would be in some kind global extreme scenario that it would not matter!

Are there any other risks when comparing funds and ETFs (and not meaning investment risk here)?

Alexland

granta said:

I'm only interested in the very mainstream ETFs like HMWO, VEVE etc. If I understand the above correctly, if you held say £150k in HMWO and there was a platform failure (and does this relate to HSBC or Fidelity?), then you would only get back £85k for a fund and £0 for the same ETF? Though Deleted_User is maybe implying that this is either highly unlikely or that we would be in some kind global extreme scenario that it would not matter!

In this example Fidelity are the platform so you are covered by FSCS for up to £85k for their failure so if the assets went missing due to their error, fraud, etc and they were unable to compensate you directly you could claim on the FSCS. Similar for a traditional OEIC type fund.

Individual company shares, ETFs and Investment Trusts (we had to get back on topic eventually) have no FSCS protection so you would be relying on the liquidators to return whatever assets might be recoverable. In the case of ITs and ETFs (and traditional OEIC type funds) while the assets are under the control of the manager they are likely held with a custodian.

granta said:

Are there any other risks when comparing funds and ETFs (and not meaning investment risk here)?

ETFs can be complicated but at the very least check they are using physical replication (ie they hold the underlying assets) rather than synthetic where the performance is based on financial instruments with counterparty risk. Also avoid holding any with a multiplication factor as over the long term the daily reset tends to cause decay. Finally, in terms of buying and selling them look for something large and liquid with a tight spread so that it can be traded at minimal cost and in large quantities. Ideally stick to those with at least a couple of billion pounds of assets where there will be frequent trades of material volumes each day.

When you progress to becoming a connoisseur of ETFs you might also want to consider domicile (we hold VEVE not HMWO in the larger account not just to get the lower the 0.12% charge but also because Ireland is favourable for the treatment of US dividends). Also consider if any asset lending helps offset the ongoing charges for example WLDS has an ongoing charge of 0.35% but then 0.07% is rebated be the Blackrock security lending programme so only 0.28% net which is still expensive but it's only a small proportion of our portfolio and probably worth the extra as there are points in the cycle when small caps tend to outperform and it helps with diversification.

bostonerimus

Alexland said:

NannaH said:

Are there advantages to using ITs instead of other funds when it comes to drawdown?

ITs can smooth the dividends such that they can pay a steady increasing dividend each year. They do this by creating an accounting entry called a revenue reserve in the good years to be distributed in bad years where the underlying holdings are unable to pay enough dividends to cover the whole trust's growing dividend. Even if that fails they can draw upon their capital reserve to pay income although the board and management know shareholders would not want to see this happen.

In current market conditions you can sustainably draw a nearly 2% smoothed yield from a global income IT and a nearly 4% smoothed yield from a UK income IT. Some trusts pay more but then you need to consider if they are likely to generate enough capital growth to keep up with inflation. You also need to consider if the dividend increases are likely to keep up with inflation.

NannaH said:

We have SM in DH’s SIPP portfolio but it’s currently 5% of our total investments and the yield isn’t good,  if that matters?

SMT is focused on growth so has a low yield although technically it has been increasing it's very modest dividend for 39 years so is an AIC dividend hero.

You can do exactly the same yourself in a sensible Total Return withdrawal strategy. There is no magic to ITs or Wealth Preservation funds.