cgar & cgt opinion

mears1

The fund manager said the following two investments are similar in return and assets and both contain Index bonds, which are better than nominal bonds (not the type which are getting a negative press).

What are your thoughts & experience on the following? If they are so similar, would  you go with the one with the cheaper ongoing charge, cgar. Also, there is no stamp duty to pay and  it has the advantage of being on OEIC?

CGAR  CG absolute return  https://www.markets.iweb-sharedealing.co.uk/funds-centre/fund-supermarket/detail/IE00BYQ69B30  0.74 % ongoing charge.
CGT Capital gearing trust https://www.markets.iweb-sharedealing.co.uk/investment-trust-centre/details/GB0001738615/CC33  0.84% ongoing charge & stamp duty is extra.




 

Rollinghome

mears1 said:

The fund manager said the following two investments are similar in return and assets and both contain Index bonds, which are better than nominal bonds (not the type which are getting a negative press).

What are your thoughts & experience on the following? If they are so similar, would  you go with the one with the cheaper ongoing charge, cgar. Also, there is no stamp duty to pay and  it has the advantage of being on OEIC?

CGT return has averaged about 1.5% pa more than CGAR over last 5 years.  Before that, there was nothing between them. 

At least some of that has been from the manager issuing new stock at a premium, to the benefit of existing holders.  CGT also holds some less liquid holdings that would be unsuitable for an OEIC. That benefit might change if sentiment turned against the CGT which may make CGAR very slightly lower risk.

I'm not the greatest fan of multi-asset funds, so neither is something I would once have wanted to invest in; but these are strange times and I currently hold both, about 50/50. 

The thinking for that was that I wasn't sure how long I would hold and, though SDRT and the spread make little difference over the long term, it would have done over a much shorter term. As it happened, I've held both for quite a while.

I have a high regard for Peter Spiller and his team, and happy to have a lump of money managed by him, though that might be reduced at some point.  As Spike Milligan/Eccles used to say: "Everybody's gotta be somewhere."

george4064

Which platform will you hold the IT or fund?

Some platforms (HL and AJBell off the top of my head, probably more) cap the platform charges for listed securities, so that might be a contributing factor to go for the IT over the OEIC fund.

aroominyork

Rollinghome said:

mears1 said:

The fund manager said the following two investments are similar in return and assets and both contain Index bonds, which are better than nominal bonds (not the type which are getting a negative press).

What are your thoughts & experience on the following? If they are so similar, would  you go with the one with the cheaper ongoing charge, cgar. Also, there is no stamp duty to pay and  it has the advantage of being on OEIC?

CGT return has averaged about 1.5% pa more than CGAR over last 5 years.  Before that, there was nothing between them. 

When you say "Before that", CGAR was only launched in May 2016...
I bought CGAR a couple of months ago. Once I feel sure it is a keeper, I will probably change to CGT. 

Albermarle

Some people prefer that when you buy or sell an IT the price is known there and then ( assuming the markets are open). Whilst with an OEIC, the price will fixed up to 36 hours after the buy/sell order. For a long term buy and hold investor this will not make any difference, but could for those trying to time the market.
Perhaps more importantly the price of the OEIC accurately reflects the value of the assets it holds. However the IT's share price will normally trade at a discount or premium to the Net asset Value. This can make the IT's price more volatile, especially if the market is moving quickly and it might not even be possible to buy or sell smaller IT's at certain moments. 

aroominyork

Albermarle said:

Some people prefer that when you buy or sell an IT the price is known there and then ( assuming the markets are open). Whilst with an OEIC, the price will fixed up to 36 hours after the buy/sell order. For a long term buy and hold investor this will not make any difference, but could for those trying to time the market.
Perhaps more importantly the price of the OEIC accurately reflects the value of the assets it holds. However the IT's share price will normally trade at a discount or premium to the Net asset Value. This can make the IT's price more volatile, especially if the market is moving quickly and it might not even be possible to buy or sell smaller IT's at certain moments. 

That has an implicit assumption that the underlying holdings are the same. I ask working on the basis that the slightly better returns for the IT are from its less liquid holdings which, for a long term investment, are worth having.

Albermarle

My comment was more about why some people prefer IT's over OEIC's ( or vice versa) in a general sense.

CheekyMikey

I’ve just moved £100k out of a short dated bond fund equally split into CGAR and Trojan X…chose funds for the simple reason I’ve always bought funds so I’m comfortable with them, and didn’t see enough difference in performance or costs, or enough benefits in the IT options to go for them. Not very scientific I know but I believe in keeping things as simple as possible…

Rollinghome

aroominyork said:

Albermarle said:

Some people prefer that when you buy or sell an IT the price is known there and then ( assuming the markets are open). Whilst with an OEIC, the price will fixed up to 36 hours after the buy/sell order. For a long term buy and hold investor this will not make any difference, but could for those trying to time the market.
Perhaps more importantly the price of the OEIC accurately reflects the value of the assets it holds. However the IT's share price will normally trade at a discount or premium to the Net asset Value. This can make the IT's price more volatile, especially if the market is moving quickly and it might not even be possible to buy or sell smaller IT's at certain moments. 

That has an implicit assumption that the underlying holdings are the same. I ask working on the basis that the slightly better returns for the IT are from its less liquid holdings which, for a long term investment, are worth having.

When I asked Peter Spiller and Chris Clothier at the AGM a few years back, they suggested the difference was at least in part due to the effect of new share issuance at a premium and the small number of less liquid holdings held by the IT, but understandably were suitably vague not wishing to say anything that could be interpreted as advice.  I believe Chris holds both versions, including for his mother.

The point was also made that it shouldn't be assumed that CGT will always sit at the present level of premium, if any. Shouldn't need pointing out that despite the name, CGT doesn't have any gearing, and I don't think has done since PS became manager - so no difference in that respect.

Rollinghome

aroominyork said:

Rollinghome said:

mears1 said:

The fund manager said the following two investments are similar in return and assets and both contain Index bonds, which are better than nominal bonds (not the type which are getting a negative press).

What are your thoughts & experience on the following? If they are so similar, would  you go with the one with the cheaper ongoing charge, cgar. Also, there is no stamp duty to pay and  it has the advantage of being on OEIC?

CGT return has averaged about 1.5% pa more than CGAR over last 5 years.  Before that, there was nothing between them. 

When you say "Before that", CGAR was only launched in May 2016...
I bought CGAR a couple of months ago. Once I feel sure it is a keeper, I will probably change to CGT. 

It was, almost exactly 6 yrs ago, and for the first year or so did slightly better than the IT in terms of price.

An oeic/ut will give a smoother ride than the equivalent IT and that's important to many people.

aroominyork

I posted this in late March 2022 after asking CG for a geographic breakdown of assets, so here it is again as it's worth seeing. nb it applied to both the IT and the OEIC.