Buy Capital Gearing Trust?

george4064

Not sure if mentioned already, but by switching from the unit trust version to the IT version you can make massive cost savings on the platform charge.

As people may already know, a few of the major investment platforms have charge caps for listed securities whilst there is no cap for unit trusts/OEICs.

JohnWinder

…though a few months ago I bought Fidelity Global Dividend to have a more blended portfolio. 

Plan would be to sell the Fidelity fund and my smallish holdings in UK All Share and Japan index funds, maybe reduce my UK and Europe smaller company funds a little, and reduce my global index bond fund. I may not put it all in CGT …

Personality, to the extent it drives behaviour, accounts for some of the returns investors get. It’s obvious that being spooked by price falls, panic-selling low and then buying back after recovery harms returns, and it’s the extreme example of behaviour affecting returns.

We would never do that, but it seems sensible people (advisors included) do something like that, and we can see it quantified over the last 30 years.

A fund gets a certain return, like 5%/year average for 30 years. If it rose steadily during that time any new investment in it would also get 5%/year. But as the rise is never smooth, investors who keep putting more money in can get >5%/year if they buy at low times, and <5%/year if they buy at high times. The investor’s return can be calculated as an internal rate of return (IRR), reflecting not only the fund’s 5%/year but also when/how much the investor added or withdrew during that 30 years.

Here’s a comparison of a passive fund which returned 11%/year, from which the average investor had an internal rate of return of 11.3%/year. There must be many reasons for that extra 0.3%, such as: ‘rebalancing bonus’; avoiding panic selling when low; avoiding buy high after a long run of good performance (before the bad sets in); regular investing rather than holding off when prices are low and there’s fear they’ll go lower etc.

The other, an active fund returned more: 11.8%/year for the same 30 years. But the investors on average only got 11.2%/year IRR. They lost out, on average, getting what the fund had to offer, and paid more fees than having a cheaper underperforming index fund.  This might be in part accounted for by investors withdrawing more than they put in during the latter half of the 30 years as the active fund underperformed a broad passive index fund, which they did, for whatever reasons (eg tried to market time or move to recent ‘winners’). https://www.advisorperspectives.com/articles/2022/05/16/how-disciplined-are-dimensional-advisors

With similar research, this further suggests that you need to stick with a plan for it to reach its potential, and the plan should be well thought out before you’re too far committed. 

And might there be something in the idea that if you’re accepting of market returns (and can thus ‘stomach’ a broad index fund), you’re more likely to be able to stick with it because, up or down, it’s doing what it promised. Compare that with someone who feels that chasing above market returns is their ‘gig’, then they’re less accepting when the outcome disappoints thus provoking one into bad investing behaviour?

aroominyork

The other point, John, is that people who started self-investing during the last decade (or four years in my case) have only seen one dynamic: growth-led equity markets steaming ahead. We/they read articles about the death of value and that it'll all come to a juddering halt one day, but like so many things in life you have to see it to believe it. So a little tinkering around the edges when we get practical experience of different market conditions can be justified. 

tigerspill

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

Alistair31

tigerspill said:

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

It is available on fidelity 

search GB0001738 in the “add investments”

masonic

tigerspill said:
Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Lloyds and iWeb both use Halifax Sharedealing for their investment services, so you wouldn't be diversifying onto another platform.

tigerspill

Alistair31 said:

tigerspill said:

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

It is available on fidelity 

search GB0001738 in the “add investments”

Thanks.
Just looking further at Fidelity's fees - I thought that the fee for holding CGT would be capped at something like £45 - but this doesn't seem to be the case - it is just 0.35%.
Unless I am reading the fee information incorrectly.

masonic

tigerspill said:

Alistair31 said:

tigerspill said:

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

It is available on fidelity 

search GB0001738 in the “add investments”

Thanks.
Just looking further at Fidelity's fees - I thought that the fee for holding CGT would be capped at something like £45 - but this doesn't seem to be the case - it is just 0.35%.
Unless I am reading the fee information incorrectly.

CGT is an investment trust, so it would be subject to the cap for shares.

tigerspill

masonic said:

tigerspill said:

Alistair31 said:

tigerspill said:

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

It is available on fidelity 

search GB0001738 in the “add investments”

Thanks.
Just looking further at Fidelity's fees - I thought that the fee for holding CGT would be capped at something like £45 - but this doesn't seem to be the case - it is just 0.35%.
Unless I am reading the fee information incorrectly.

CGT is an investment trust, so it would be subject to the cap for shares.

Ah.  Thank you.  I thought it was just ETFs were subject to the cap.  But I guess they are similar in this respect to ETFs in that they are essentliay shares in the IT company.
https://www.fidelity.co.uk/services/investment-account/fees-and-charges/#tab-link 

Albermarle

tigerspill said:

masonic said:

tigerspill said:

Alistair31 said:

tigerspill said:

Hi,

Is CGT not available on the Fidelity platform?  I cant seem to find it.
If not, what platform might be the cheapest for holding £40k of CGT?  (not iWeb as I already have a lot of money invested here and wish to diversify onto another platform).

Does anyone have a view on lloyds Share Dealing platform?  They seem to charge £40 / year and have CGT.

Thanks

It is available on fidelity 

search GB0001738 in the “add investments”

Thanks.
Just looking further at Fidelity's fees - I thought that the fee for holding CGT would be capped at something like £45 - but this doesn't seem to be the case - it is just 0.35%.
Unless I am reading the fee information incorrectly.

CGT is an investment trust, so it would be subject to the cap for shares.

Ah.  Thank you.  I thought it was just ETFs were subject to the cap.  But I guess they are similar in this respect to ETFs in that they are essentliay shares in the IT company.
https://www.fidelity.co.uk/services/investment-account/fees-and-charges/#tab-link 

All 'exchange traded investments' have the £45 cap. Includes individual company shares, IT's and ETF's.