Law Debenture IT

TUVOK

I'm in the process of re-arranging my holdings into cheapest platform for their category, i.e. IT's in to HL ISA, it's paying off very well, should have done it a lot sooner.

I'm holding Smithson, Mid Wynd and Bankers IT's in a Fidelity ISA platform and need to either sell and open them all in HL or possibly sell Smithson and Mid Wynd.

Another option is possible replacements for them all and Law Debenture is a IT that I have monitored for a time, it's done well over a long timescale and gives adequate dividends.
The main problem with buying it is that it is at it's highest price as of today.
I would welcome opinions on how members rate Law Debenture and whether buying at it's peak is a no no!

tacpot12

I didn't used to rate Law Debenture when I was looking at building my IT portfolio five years ago, but having reviewed it off the back of your post, I can see that it has improved in terms of share price performance, dividends paid & dividend growth, and the charges have been reduced. I would buy it now, but not at much of a premium. The AIC reports the premium as 2.2%. If that it really the premium today, I think I would buy, but it is right at the top of what I would be comfortable paying for it.

I also hold Bankers. 

talexuser

I also dismissed Law some time ago when setting up the ITs for its relative long term performance, but it has had a good spurt in the last couple of years. I wonder what the reason is in terms of holdings/changed circumstances/change of style etc etc. (I also have Mid Wynd and Bankers which have relatively suffered in the recent (temporary?) swerve to value.)

Apodemus

I have LWDB in my SIPP and, in total return terms, it is the best performing of my ITs - a total gain of 69.9% if I was to sell at today's price, since buying in late 2020.  Just ahead of my Edinburgh Investment Trust and MYI holdings over the same period - all of which are well clear of Bankers Trust, which has only given me 6% over that time.  Of course, the past is not necessarily a guide for the future and Bankers serves a different function for me in my list.

NoviceInvestor1

Would selling MWY and SSON to buy LWDB right now not be a classic case of selling low and buying high?

TUVOK

NoviceInvestor1 said:

Would selling MWY and SSON to buy LWDB right now not be a classic case of selling low and buying high?

Yes I believe you are correct in that statement, however how many years do you hold on to a poorly performing investment locking in money which could develop a lot better in a new investment?
I've held Smithson and Mid Wynd for quite a long time, both very disappointing! and from recent performance the future looks the same.
 

talexuser

This is difficult - buying  after a spurt in performance tables could just be luck by the manager. I generally give a fund at least two years to recover from an overall plan if underperformed. For instance the Smithson I bought in 2019 is 15% up, the 2020 buy is 10% down, when do you bail out? But Fundsmith which should have the same philosophy is 125% up from when I bought in earlier.
There is tortoise and hare here too, something like Foreign & Colonial is never the top of table but is a good long term punt if you want less volatility.

Rollinghome

TUVOK said:

I'm in the process of re-arranging my holdings into cheapest platform for their category, i.e. IT's in to HL ISA, it's paying off very well, should have done it a lot sooner.

I'm holding Smithson, Mid Wynd and Bankers IT's in a Fidelity ISA platform and need to either sell and open them all in HL or possibly sell Smithson and Mid Wynd.

Another option is possible replacements for them all and Law Debenture is a IT that I have monitored for a time, it's done well over a long timescale and gives adequate dividends.
The main problem with buying it is that it is at it's highest price as of today.
I would welcome opinions on how members rate Law Debenture and whether buying at it's peak is a no no!

It's not possible to say how suitable this is for you without knowing how it fits in with the rest of your pf and your situation.  In general, it's not usually the best approach to choose your investments because the platform you use is extremely expensive for funds, or because the investment is now more expensive than it was.

James Henderson is a long time value investor, as is Laura Foll, and also manage Lowland, Henderson Equity Income Fund, and Henderson Opportunities Trust Fund. Their funds have been more successful of late as there has been a widespread swing from growth to value over the past year or more.  The discount has moved from 13% to a premium that peaked at around 5% - a movement of around 18% - which tends to make the performance look impressive. 

No one knows how long the swing to value will last before the pendulum moves the other way, and when it does, the premium/discount will surely follow - a double whammy.  There's a chance you could be arriving at the party just as everyone else is going home. Often, a more profitable approach is to arrive early by buying an IT that is out of favour that you think will improve. If you're uncertain, then consider a tracker.

I understand why you aren't happy paying the high fees at HL, but a better solution would be to use another platform.  Depending on the size of your pf, Iweb might be an obvious candidate: share/IT/ETF trades at less than half those of HL and no £45 capped charge for ISAs either.  Just a fiver per trade for IT, fund or whatever you choose.

NoviceInvestor1

TUVOK said:

NoviceInvestor1 said:

Would selling MWY and SSON to buy LWDB right now not be a classic case of selling low and buying high?

Yes I believe you are correct in that statement, however how many years do you hold on to a poorly performing investment locking in money which could develop a lot better in a new investment?
I've held Smithson and Mid Wynd for quite a long time, both very disappointing! and from recent performance the future looks the same.
 

It's the problem with choosing active funds - most people choose by buying what has done well, when it stops doing well they want to sell and buy what has done well/better over the last x period. So sell at a loss and buy something high - which then stops performing for whatever reason, at which point sell low and buy the next hot thing high. Rinse and repeat. It's a near guaranteed way to destroy wealth. 

If there is a way of knowing what will outperform in future then you'd want to always buy whatever is going to do well next, but something doing well in the past isn't an indication of that.

Knowing what to do with an underperforming investment is a challenge.....

If you've held MWY for some time you will be significantly up vs the world index, but worth considering how you think the new manager will fare. 

Prism

Smithson is almost exactly the same fund that it was at launch. So if you believe you made a mistake in buying it due to its quality growth style then I would sell it. For me its one of the last trusts that I would sell.

TUVOK

Yes, you are correct of course.
I'm carrying a large loss on this holding and it's compounded by the growth aspect seemingly well out of profitable performance.
I believe that on reflection it's a holding that I will have to keep on the back burner!