Investment trusts v OEICs

Audaxer

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

TBC15

Aged said:

TBC15 said:

ITs make for an incredibly cheap to operate pension.

Why is that?

The pricing structure for ETFs. I currently pay £63 pa all in platform fees with Fidelity for a SIPP in drawdown. Bit of a bargain in my books.

masonic

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

Audaxer

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

masonic

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

It's not correct to make the blanket statement that they aren't covered under FSCS. There is some cover, just not against all of the same risks as OEICs. Those who invested in such vehicles using SVS Securities all got FSCS compensation. Contrast this with P2P lending, which is actually exempt from FSCS protection. Here there is no payout under any circumstances, even if the FCA Authorised platform goes bust or you have a compensation award from the Financial Ombudsman Service.

You can certainly say there is no protection for losses that occur within the investment vehicle, but it is misleading to suggest there is no FSCS protection at all. It also isn't fair to suggest only non-mainstream platforms/brokers would be implicated - for any provider that goes bust there is likely to be some call on the FSCS, even if it is managed seamlessly in the background.

Audaxer

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

It's not correct to make the blanket statement that they aren't covered under FSCS. There is some cover, just not against all of the same risks as OEICs. Those who invested in such vehicles using SVS Securities all got FSCS compensation. Contrast this with P2P lending, which is actually exempt from FSCS protection. Here there is no payout under any circumstances, even if the FCA Authorised platform goes bust or you have a compensation award from the Financial Ombudsman Service.

You can certainly say there is no protection for losses that occur within the investment vehicle, but it is misleading to suggest there is no FSCS protection at all. It also isn't fair to suggest only non-mainstream platforms/brokers would be implicated - for any provider that goes bust there is likely to be some call on the FSCS, even if it is managed seamlessly in the background.

From the previous comments I have seen on this forum, including from a very knowledgeable IFA when I asked the question some years ago, Investment Trusts are not covered by FSCS:
Investment Trusts not covered by the FSCS? — MoneySavingExpert Forum

I did not suggest only non-mainstream platforms/brokers would be implicated. I was agreeing with you that it was most likely to be needed against non-mainstream platforms, as you had said there was a number of examples of platforms/brokers that have gone bust. I just referred to "non-mainstream" platforms as I think there is less risk of one of the mainstream platforms going bust, but you are obviously still covered if it did happen.

masonic

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

It's not correct to make the blanket statement that they aren't covered under FSCS. There is some cover, just not against all of the same risks as OEICs. Those who invested in such vehicles using SVS Securities all got FSCS compensation. Contrast this with P2P lending, which is actually exempt from FSCS protection. Here there is no payout under any circumstances, even if the FCA Authorised platform goes bust or you have a compensation award from the Financial Ombudsman Service.

You can certainly say there is no protection for losses that occur within the investment vehicle, but it is misleading to suggest there is no FSCS protection at all. It also isn't fair to suggest only non-mainstream platforms/brokers would be implicated - for any provider that goes bust there is likely to be some call on the FSCS, even if it is managed seamlessly in the background.

From the previous comments I have seen on this forum, including from a very knowledgeable IFA when I asked the question some years ago, Investment Trusts are not covered by FSCS:
Investment Trusts not covered by the FSCS? — MoneySavingExpert Forum

I'm sorry, but you've made an incorrect generalisation from the responses to a specific question about an investment trust itself going into liquidation. I can assure you that if you invest in investment trusts/ETFs, your broker goes bust and you stand to lose some of your investments, you do have recourse to the FSCS and there is precedent for this happening in practice. Therefore it is not correct to say they are not covered in general, just that losses that occur within the investment vehicle are not covered. By making that distinction, others can be saved from the same misunderstanding.

Audaxer said:

I did not suggest only non-mainstream platforms/brokers would be implicated. I was agreeing with you that it was most likely to be needed against non-mainstream platforms, as you had said there was a number of examples of platforms/brokers that have gone bust. I just referred to "non-mainstream" platforms as I think there is less risk of one of the mainstream platforms going bust, but you are obviously still covered if it did happen.

I've made no distinction between mainstream and non-mainstream providers in that post. I do not consider SVS XO to be non-mainstream, although a separate business unit did engage in some non-mainstream activities, the execution only part of the business was involved with mainstream retail activities. I agree with you that the risk will be lower with larger, more popular platforms, but I would also consider some of the smaller providers such as Jarvis to be extremely low risk too.

Audaxer

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

It's not correct to make the blanket statement that they aren't covered under FSCS. There is some cover, just not against all of the same risks as OEICs. Those who invested in such vehicles using SVS Securities all got FSCS compensation. Contrast this with P2P lending, which is actually exempt from FSCS protection. Here there is no payout under any circumstances, even if the FCA Authorised platform goes bust or you have a compensation award from the Financial Ombudsman Service.

You can certainly say there is no protection for losses that occur within the investment vehicle, but it is misleading to suggest there is no FSCS protection at all. It also isn't fair to suggest only non-mainstream platforms/brokers would be implicated - for any provider that goes bust there is likely to be some call on the FSCS, even if it is managed seamlessly in the background.

From the previous comments I have seen on this forum, including from a very knowledgeable IFA when I asked the question some years ago, Investment Trusts are not covered by FSCS:
Investment Trusts not covered by the FSCS? — MoneySavingExpert Forum

I'm sorry, but you've made an incorrect generalisation from the responses to a specific question about an investment trust itself going into liquidation. I can assure you that if you invest in investment trusts/ETFs, your broker goes bust and you stand to lose some of your investments, you do have recourse to the FSCS and there is precedent for this happening in practice. Therefore it is not correct to say they are not covered in general, just that losses that occur within the investment vehicle are not covered. By making that distinction, others can be saved from the same misunderstanding.

It actually states in the linked KID of JGGI Investment Trust below that "Investors in The Company are not eligible to claim under the UK Financial Services Compensation Scheme."
JPMorgan Global Growth & Income plc - Ordinary Shares (morningstar.com)

That is why I said that is one of the differences between ITs and OIECs. 

You have a different view, which is fine, so let's agree to disagree and leave it at that.

masonic

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

masonic said:

Audaxer said:

One other difference is that OIECs are covered by the FSCS up to £85k, whereas ITs are not covered. The risk however is said to be fairly low, for example if you were to lose some of your OIEC investment because of a major fraud in the fund house.

For the more commonly called upon FSCS claim (when your broker/platform goes bust with a shortfall due to an imbalance and/or administrator fees) ITs, ETFs and other listed investments are covered. It is just losses that occur within the investment instrument that are not covered.

As regards the actual fund houses for OIECs, you would be covered by FSCS up to £85,000 for any losses due to a major fraud within the fund house. If there was a similar loss due to a major fraud in the IT company or ETF, then individual investors are not covered under the FSCS. As has been discussed on this forum previously, the risk of loss to individual investors due to a major fraud in a mainstream fund house is minimal. 

Major fraud within the fund house would only be covered by the FSCS if it was significant enough that the investment company providing the fund went bust. It's not just a minimal risk, but to the best of my knowledge it is unprecedented. While there are a number of examples of investment platforms/brokers that have gone bust. Therefore, the aspect of FSCS protection that is of most value is that protecting you against your platform, which applies equally to all types of investment. The lack of recourse against stockmarket listed investment vehicles is worth taking note of, but it is not a factor that is of much importance in choosing investments in my view.

I agree it is not a major problem and wouldn't stop me from investing in Investment Trusts, but I was just pointing out the fact that as ITs and ETFs are direct investments like shares, they are not covered under FSCS. I agree the protection is most likely to be needed against a non-mainstream platform/broker rather than a fund house. 

In my previous post I just mentioned that FSCS protection was another difference between OIECs and ITs because the thread was about the differences of OIECs and ITs.

It's not correct to make the blanket statement that they aren't covered under FSCS. There is some cover, just not against all of the same risks as OEICs. Those who invested in such vehicles using SVS Securities all got FSCS compensation. Contrast this with P2P lending, which is actually exempt from FSCS protection. Here there is no payout under any circumstances, even if the FCA Authorised platform goes bust or you have a compensation award from the Financial Ombudsman Service.

You can certainly say there is no protection for losses that occur within the investment vehicle, but it is misleading to suggest there is no FSCS protection at all. It also isn't fair to suggest only non-mainstream platforms/brokers would be implicated - for any provider that goes bust there is likely to be some call on the FSCS, even if it is managed seamlessly in the background.

From the previous comments I have seen on this forum, including from a very knowledgeable IFA when I asked the question some years ago, Investment Trusts are not covered by FSCS:
Investment Trusts not covered by the FSCS? — MoneySavingExpert Forum

I'm sorry, but you've made an incorrect generalisation from the responses to a specific question about an investment trust itself going into liquidation. I can assure you that if you invest in investment trusts/ETFs, your broker goes bust and you stand to lose some of your investments, you do have recourse to the FSCS and there is precedent for this happening in practice. Therefore it is not correct to say they are not covered in general, just that losses that occur within the investment vehicle are not covered. By making that distinction, others can be saved from the same misunderstanding.

It actually states in the linked KID of JGGI Investment Trust below that "Investors in The Company are not eligible to claim under the UK Financial Services Compensation Scheme."
JPMorgan Global Growth & Income plc - Ordinary Shares (morningstar.com)

That is why I said that is one of the differences between ITs and OIECs. 

You have a different view, which is fine, so let's agree to disagree and leave it at that.

It is clear that they are referring claims relating to their own company in their KID, it immediately follows the statement "investors may suffer loss if The Company or the depositary is unable to pay out". If the comment is used elsewhere, without qualification, then it is misleading. I won't agree to disagree on that point, I'll continue to clarify when I come across such comments in future.

We agree that you cannot claim against for losses incurred within the trust, but you are not willing to accept my clarification or modify your language to make it clear you are referring only to losses within the investment vehicle. I cannot understand why you would take that position. Do you believe that if your investment platform goes into administration and cannot return/repay the value of all of your investment trust shares, you cannot claim under the FSCS?