Vanguard FTSE 100 UCITS ETF GBP (VUKE)

AsifM068

wmb194 said:

AsifM068 said:

wmb194 said:

AsifM068 said:

wmb194 said:

AsifM068 said:

wmb194 said:

In addition to an increase in the value of shares you're also hoping for a growing dividend e.g., look at City of London's track record. Obsessing over one year moves is too short term.

Take a look a the companies included in the FTSE100 and City of London's holdings and you'll see they're a bit different... I'm not sure why the choice is either/or.

A share price can increase over a period of time but still trade at a discount to NAV. It's common for IT's to trade at a discount to NAV. Historically 10% hasn't been untypical.

'A share price can increase over a period of time but still trade at a discount to NAV'; how can this happen, if the NAV, by my understanding, is the value of the underlying assets of the fund? So the NAV is independent of share price? Oh dear...I really am lost now...help please?

The market sets the price, the NAV only influences it. Until recently many of the renewables trusts were trading at 10%+ premiums to NAV. The reasons can vary. Sometimes the market won't fully trust the valuation e.g., typical with trusts/CEICs investing in private equity, sometimes it believes earnings or asset values will rise above the current NAV e.g., renewables* or sometimes the market just loves the manager e.g., Nick Train of Lindsell Train, LTI, though I think the premium has evaporated now.

*Until a few weeks ago, anyway...

Thank you; but when a fund trades at a discount to its NAV; does the share price not follow suit that is to go down  You've probably answered this already, I'm just not clear. The share price must be correlated to the NAV or are you saying that the share price is independent of the NAV and is solely dependent on demand / supply forces?

All I've learnt is that a little knowledge can be a very dangerous thing; but I'm hanging in still............

The share price is set by the market, so the balance of buying and selling. The NAV *influences* the share price and gives market participants something to base the price they're willing to buy and sell on. 

Sometimes the share price will increase to close the discount - it's one of the ways you can play ITs i.e. look for those where the discount seems abnormally wide. You often find these situations when the market is panicking about something.

Btw, 'trading at a discount' means that the share price is below the NAV. 'Trading at a premium' is where it's above, which is the scenario you seem to be talking about. Yes, selling at a premium is often a good idea but it depends on the circumstances.

Also, you need to be careful with NAVs in fast moving markets as they will be a least a day out.

Thank you so much for this; from looking at Killik and Co on Youtube; has helped me as well. The concept of a discount and a premium only apply to closed funds such as ITs and not open ended funds such as mutual funds. With an open ended fund the NAV determines the value per unit where as with a closed vehicle such as an Investment Trust the value / market capitalisation is determined by buyers and sellers (supply and demand) - please say this is right??!!  

Yes, correct.

Phew - there's hope for me still then..please don't respond to that..lol...thank you again for your help for I was really struggling yet we all have to start somewhere I guess - great stuff, far happier now.

wmb194

AsifM068 said:

InvesterJones said:

AsifM068 said:

Evening forum,

any thoughts about VUKE as a steady vehicle for income vs The City of London Investment Trust for example please?

Also with the Government's current move towards and significant in a bid to attract foreign investment (that's my understanding and I may be wrong...probably...), is now not the time to be investing in UK markets due to a weak pound - easy terms please if you can?

Thank you team

Low pound means you've got less relatively to invest anywhere, at which point you still need to decide which is the best option going forwards. UK markets will be relatively better value than they were before so if going for value (which correlates with income) they're not bad from that perspective. However rather than a weak pound being the cause of their improved value, it's the government's actions which have led markets to believe the UK economy is going to perform (even) more poorly than before, thus they've moved their investments elsewhere and this has caused the pound and equities valuations to fall.

So you have to either decide the markets have the right idea - UK is not good to invest in, or they've had the wrong idea - UK is now a bargain to invest in, or the pragmatic: markets have the right idea and have already acted on it - UK is a less good place to invest in but prices have already fallen reflect that so it works out the same.

I think I'd wait for a bit more of a steady state before assuming the latter.

AsifM068 said:

Second point / question if I may; If I invest in a trust or a fund with a dividend yield of 5% for example. At the end of the year lets say the share / unit price trades at / falls to a 5% discount to its NAV - this would mean a zero sum scenario? I would not gain anything; is this correct please?

Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.

'Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.'

For any given Investment Trust - how do I monitor the value of the assets held by the IT - would this be total returns that I need to look at please as there are so many graphs and metrics available? 

Many but not all ITs issue daily NAV updates for the previous day. You can find them on the LSE's website in the news section of the company page (you need to unselect the "Show only earnings..." box). Trusts' factsheets will usually show month end NAVs but it really comes down to how closely you want to follow it.

https://www.londonstockexchange.com/stock/CTY/city-of-london-investment-trust-plc/company-page

AsifM068

wmb194 said:

AsifM068 said:

InvesterJones said:

AsifM068 said:

Evening forum,

any thoughts about VUKE as a steady vehicle for income vs The City of London Investment Trust for example please?

Also with the Government's current move towards and significant in a bid to attract foreign investment (that's my understanding and I may be wrong...probably...), is now not the time to be investing in UK markets due to a weak pound - easy terms please if you can?

Thank you team

Low pound means you've got less relatively to invest anywhere, at which point you still need to decide which is the best option going forwards. UK markets will be relatively better value than they were before so if going for value (which correlates with income) they're not bad from that perspective. However rather than a weak pound being the cause of their improved value, it's the government's actions which have led markets to believe the UK economy is going to perform (even) more poorly than before, thus they've moved their investments elsewhere and this has caused the pound and equities valuations to fall.

So you have to either decide the markets have the right idea - UK is not good to invest in, or they've had the wrong idea - UK is now a bargain to invest in, or the pragmatic: markets have the right idea and have already acted on it - UK is a less good place to invest in but prices have already fallen reflect that so it works out the same.

I think I'd wait for a bit more of a steady state before assuming the latter.

AsifM068 said:

Second point / question if I may; If I invest in a trust or a fund with a dividend yield of 5% for example. At the end of the year lets say the share / unit price trades at / falls to a 5% discount to its NAV - this would mean a zero sum scenario? I would not gain anything; is this correct please?

Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.

'Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.'

For any given Investment Trust - how do I monitor the value of the assets held by the IT - would this be total returns that I need to look at please as there are so many graphs and metrics available? 

Many but not all ITs issue daily NAV updates for the previous day. You can find them on the LSE's website in the news section of the company page (you need to unselect the "Show only earnings..." box). Trusts' factsheets will usually show month end NAVs but it really comes down to how closely you want to follow it.

https://www.londonstockexchange.com/stock/CTY/city-of-london-investment-trust-plc/company-page

This is great - thank you sir.

InvesterJones

AsifM068 said:

InvesterJones said:

AsifM068 said:

Evening forum,

any thoughts about VUKE as a steady vehicle for income vs The City of London Investment Trust for example please?

Also with the Government's current move towards and significant in a bid to attract foreign investment (that's my understanding and I may be wrong...probably...), is now not the time to be investing in UK markets due to a weak pound - easy terms please if you can?

Thank you team

Low pound means you've got less relatively to invest anywhere, at which point you still need to decide which is the best option going forwards. UK markets will be relatively better value than they were before so if going for value (which correlates with income) they're not bad from that perspective. However rather than a weak pound being the cause of their improved value, it's the government's actions which have led markets to believe the UK economy is going to perform (even) more poorly than before, thus they've moved their investments elsewhere and this has caused the pound and equities valuations to fall.

So you have to either decide the markets have the right idea - UK is not good to invest in, or they've had the wrong idea - UK is now a bargain to invest in, or the pragmatic: markets have the right idea and have already acted on it - UK is a less good place to invest in but prices have already fallen reflect that so it works out the same.

I think I'd wait for a bit more of a steady state before assuming the latter.

AsifM068 said:

Second point / question if I may; If I invest in a trust or a fund with a dividend yield of 5% for example. At the end of the year lets say the share / unit price trades at / falls to a 5% discount to its NAV - this would mean a zero sum scenario? I would not gain anything; is this correct please?

Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.

'Only if the underlying assets of the fund don't change in value. If the assets (shares in companies, say) increase in value then despite the 5% discount to NAV (net asset value) you'll come out ahead in a year that gives 5% yield.'

For any given Investment Trust - how do I monitor the value of the assets held by the IT - would this be total returns that I need to look at please as there are so many graphs and metrics available? 

That will depend on the platform, look for NAV - it will probably be something like Published NAV or Last NAV - it's a per-unit value so that you can easily compare it with the unit price and work out the discount/premium.